Question 46

The surplus from the foreclosure sale belongs to the mortgagor (borrower).

After a foreclosure sale, any surplus remaining after satisfying the loan and related expenses is returned to the mortgagor (borrower). In this scenario, the total sale amount of $100,000 exceeds the total loan and expenses of $75,000, resulting in a surplus of $25,000 that rightfully belongs to the borrower.

A) trustee.

The trustee is responsible for overseeing the foreclosure process and ensuring that the sale is executed properly. However, the trustee does not have claim to any surplus funds; those are designated for the borrower after all debts have been settled.

B) mortgagor (borrower).

This option is correct as the surplus after the foreclosure sale, which totals $25,000, is owed to the mortgagor (borrower) after the loan and expenses have been paid. The borrower is entitled to any excess funds remaining after satisfying the mortgage obligation.

C) mortgagee files claim.

While the mortgagee (lender) may file a claim for the amount owed, they do not receive any surplus funds once the loan and expenses are covered. The mortgagee's claim would only pertain to the original loan amount and any associated costs, not the surplus.

D) lender keeps all.

This option is incorrect as it implies that the lender would retain any surplus funds, which is not the case. After satisfying the loan and expenses, any remaining surplus must be returned to the borrower, not kept by the lender.

Conclusion

The correct answer is that the surplus from the foreclosure sale belongs to the mortgagor (borrower), as they are entitled to any excess funds after satisfying the loan and all related expenses. Other options either misinterpret the distribution of surplus funds or incorrectly suggest that the lender or trustee would retain those funds. Thus, the borrower’s right to the surplus is clearly established by the foreclosure process.