Humber/Ontario Real Estate Course 4 Exam Practice

Which mortgage remedy is suitable if a homeowner wants to transfer the property back to the lender due to financial hardship?

1. Bankruptcy

2. Mortgage Renegotiation

3. Foreclosure

4. Quit Claim Deed

5. Mortgage Assumption

6. Power of Sale

The correct answer is: Foreclosure

Foreclosure is a legal process that allows a lender to recover the amount owed on a defaulted loan by forcing the sale of the asset used as collateral for the loan, typically the property. In situations of financial hardship, a homeowner may find themselves unable to meet their mortgage obligations, and foreclosure provides a method for them to transfer the property back to the lender. When a homeowner enters foreclosure, they are essentially surrendering their rights to the property to the lender. This process typically involves court proceedings where the lender must prove that the homeowner is in default and that they have a right to take possession of the property. Upon completion of the foreclosure process, the lender can sell the property to recover the outstanding debt. Other options such as bankruptcy do not specifically result in transferring property back to the lender, but rather offer a way to reorganize debts. Mortgage renegotiation involves trying to adjust the terms of the loan to make it more affordable but does not inherently involve the transfer of property. A quit claim deed is a means to transfer interest in a property but does not involve a formal process like foreclosure and can leave the homeowner liable for remaining debts. Mortgage assumption allows another party to take over the mortgage without transferring ownership back to the lender. Lastly, power of