Escrow & Title
A 'deed in lieu of foreclosure' in New Mexico occurs when:
AThe court orders the property sold at a trustee's sale
BThe borrower voluntarily conveys the property to the lender to satisfy the debt and avoid foreclosure✓ Correct
CThe lender forgives the debt entirely
DThe buyer assumes the existing mortgage
Explanation
In a deed in lieu of foreclosure, the borrower voluntarily transfers ownership to the lender in exchange for release from the loan obligation, avoiding the formal foreclosure process.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
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