40. A borrower fails to make two consecutive payments on a loan secured by a mortgage on an office building. The lender may
Answer: C
The lender may accelerate the balance of the loan.
When a borrower fails to make two consecutive payments on a mortgage, the lender has the right to accelerate the balance of the loan, meaning the entire remaining amount becomes due immediately.
A) execute a deed in lieu of foreclosure
Executing a deed in lieu of foreclosure involves the borrower voluntarily transferring the property title to the lender to satisfy the loan. While this is a potential option for resolving defaults, it is not the immediate action taken when a borrower has missed two payments.
B) evict delinquent tenants at the building
Evicting tenants is not a direct remedy available to the lender in the case of a borrower's default on mortgage payments. This action pertains to landlord-tenant relationships rather than the lender's rights in a mortgage default situation.
C) accelerate the balance of the loan
Accelerating the balance of the loan is a common remedy for lenders when borrowers default by not making payments. This action allows the lender to demand the total outstanding amount of the loan immediately, reflecting their right to secure repayment.
D) appoint a receiver for the property
While appointing a receiver may be an option in some foreclosure situations, it is typically a more complex legal process that occurs later in the default timeline. It is not the immediate next step following two missed payments.
Conclusion
The ability to accelerate the balance of the loan is a fundamental right of lenders when borrowers default, making option C the correct choice. Other options, while potentially relevant in different contexts, do not directly address the immediate consequences of two missed payments under a mortgage agreement.