Humber/Ontario Real Estate Course 4 Exam Practice

If Simon Brown, a mortgagee, allows mortgagor Marie to hand over property due to financial trouble, what action is this?

1. Refinancing

2. Quit Claim Deed

3. Loan Modification

4. Short Sale

5. Foreclosure

6. Mortgage Transfer

The correct answer is: Quit Claim Deed

The action described in the scenario, where the mortgagee allows the mortgagor to hand over the property due to financial trouble, is best identified as a Quit Claim Deed. This is a legal instrument that conveys whatever interest the grantor has in the property without any warranties. In this case, Simon Brown, as a mortgagee, is effectively accepting the property back from Marie, the mortgagor, possibly in lieu of foreclosure. This process often occurs when a homeowner realizes they can no longer afford the mortgage and wishes to avoid the lengthy and often damaging effects of foreclosure. By using a Quit Claim Deed, the homeowner can transfer their remaining interest in the property to the lender, who accepts the deed instead of pursuing foreclosure proceedings. This can be a mutually beneficial solution that alleviates the burden on the borrower. The other options do not align with the scenario. For instance, refinancing involves replacing an existing loan with a new one, a loan modification refers to changing the terms of the mortgage to make payments more manageable, and a short sale typically occurs when a property is sold for less than the outstanding mortgage balance with lender approval. Foreclosure is a legal process initiated by the lender to recover the debt, which is different from an