Finance
A Massachusetts property has a 'due-on-sale' clause. The seller wants to help the buyer by allowing them to 'take subject to' the mortgage (without the lender's approval). This:
AIs a legitimate financing arrangement lenders must accept
BWould trigger the due-on-sale clause, allowing the lender to demand full loan payment✓ Correct
CIs encouraged by the Massachusetts Division of Banks
DIs only illegal for FHA loans
Explanation
If the buyer takes title 'subject to' an existing mortgage without the lender's approval, the due-on-sale clause is triggered, giving the lender the right to accelerate the entire loan balance.
Related Massachusetts Finance Questions
- An 'assumable mortgage' allows:
- A 'home equity line of credit' (HELOC) differs from a home equity loan in that:
- A Massachusetts mortgage lender uses an automated underwriting system (AUS) like Fannie Mae's Desktop Underwriter (DU) to:
- Points paid on a mortgage to buy down the interest rate are also called:
- What type of mortgage loan requires Private Mortgage Insurance (PMI) in Massachusetts?
- A Massachusetts lender requires a property appraisal for a purchase loan. The appraisal comes in at $490,000 but the purchase price is $520,000. The lender will typically base the loan on:
- The Closing Disclosure (CD) required by TRID must be provided to the borrower at least how many business days before closing?
- A 'due-on-sale' clause in a mortgage requires:
Practice More Massachusetts Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Massachusetts Quiz →