New Jersey Real Estate License Exam Practice Question
A lender whose mortgagor has defaulted may be offered a deed in lieu of foreclosure. If accepted, which of the following will be true?
Correct Answer: B
Rationale: A deed in lieu of foreclosure involves the borrower voluntarily transferring the property title to the lender to avoid foreclosure.
**Option B is accurate** as the lender takes the title subject to any junior liens, meaning any existing subordinate claims against the property remain in effect.
**Option A is incorrect**; while voluntary, a deed in lieu can still negatively impact the borrower's credit score.
**Option C is misleading**; the lender may not retain rights under mortgage insurance or VA guarantees after accepting the deed.
**Option D is false**; once a deed in lieu is executed, the original loan is typically not assumable.
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