Finance
In NC, a 'deed in lieu of foreclosure' has which disadvantage for the borrower compared to a short sale?
AIt is faster to complete than a short sale
BThe borrower receives no sale proceeds and may have less negotiating power over deficiency waiver✓ Correct
CIt requires court approval
DIt increases the borrower's credit score
Explanation
In a deed in lieu, the borrower hands the property to the lender and receives no sale proceeds. In a short sale, there may be more room to negotiate debt forgiveness terms with the lender and potentially receive some financial relief.
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Key Terms to Know
Short Sale
A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
DeedA 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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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