Finance
In Rhode Island, a 'power of sale' foreclosure clause allows a lender to:
ASell the property at auction without a court order when the borrower defaults✓ Correct
BRequire the borrower to sell the property within 90 days of default
CTransfer the mortgage to another lender without borrower consent
DConvert the loan to a variable rate upon default
Explanation
A power of sale clause in a Rhode Island mortgage allows the lender to conduct a non-judicial foreclosure sale at public auction without obtaining a court order when the borrower defaults.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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