Finance
In New Mexico, when a property's loan is 'underwater' or 'upside down,' it means:
AThe property is located in a flood zone
BThe outstanding loan balance exceeds the current market value of the property✓ Correct
CThe loan has a negative amortization feature
DThe property taxes exceed the mortgage payment
Explanation
An 'underwater' mortgage means the borrower owes more than the property is worth. This situation prevents the owner from selling without bringing cash to closing and can lead to short sales, deeds in lieu of foreclosure, or foreclosure.
Related New Mexico Finance Questions
- A New Mexico buyer uses a 203(k) rehabilitation loan. This is a program offered by:
- In New Mexico, a deed of trust has three parties. Who are they?
- What is the minimum down payment required for an FHA loan for a borrower with a credit score of 580 or higher?
- In New Mexico, the Truth in Lending Act (TILA) right of rescission allows a borrower to cancel which type of loan within three business days?
- Regulation Z (Truth in Lending Act) requires lenders to disclose:
- The secondary mortgage market allows lenders to:
- A New Mexico buyer wants to assume an existing FHA loan. The lender's role in this situation is to:
- A New Mexico buyer uses a bridge loan to purchase a new home before their current home sells. A bridge loan is:
Practice More New Mexico Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Mexico Quiz →