An apartment building in Ithaca, New York with 72 units was financed with a $7.2 million non-recourse first mortgage loan at a 3.6% annual interest rate and an additional $3.6 million fully recourse second mortgage loan at a 7.2% annual interest rate. The owner later borrowed another $720,000 with a fully recourse third mortgage loan at a 10.8% annual interest rate. The borrower ultimately found itself in financial distress and unable to make the monthly mortgage payments on the three outstanding mortgage loans and the property went into foreclosure. What happens to the claims of the second and third mortgage lenders if the foreclosure lawsuit by the first mortgage lender includes all junior mortgage lenders and the property is sold to an unrelated third party for a net price of $6.6 million at the foreclosure sale? a. The mortgage liens of the junior claimants and the loan amounts owed to them are unaffected by the foreclosure sale b. The mortgage liens of the junior claimants are extinguished but the loan amounts owed to them are unaffected by the foreclosure sale c. The mortgage liens of the junior claimants are unaffected but the loan amounts owed to them are extinguished by the foreclosure sale d. The mortgage liens of the junior claimants and the loan amounts owed to them are extinguished by the foreclosure sale
An apartment building in Ithaca, New York with 72 units was financed with a $7.2 million non-recourse first mortgage loan at a 3.6% annual interest rate and an additional $3.6 million fully recourse second mortgage loan at a 7.2% annual interest rate. The owner later borrowed another $720,000 with a fully recourse third mortgage loan at a 10.8% annual interest rate. The borrower ultimately found itself in financial distress and unable to make the monthly mortgage payments on the three outstanding mortgage loans and the property went into foreclosure. What happens to the claims of the second and third mortgage lenders if the foreclosure lawsuit by the first mortgage lender includes all junior mortgage lenders and the property is sold to an unrelated third party for a net price of $6.6 million at the foreclosure sale? a. The mortgage liens of the junior claimants and the loan amounts owed to them are unaffected by the foreclosure sale b. The mortgage liens of the junior claimants are extinguished but the loan amounts owed to them are unaffected by the foreclosure sale c. The mortgage liens of the junior claimants are unaffected but the loan amounts owed to them are extinguished by the foreclosure sale d. The mortgage liens of the junior claimants and the loan amounts owed to them are extinguished by the foreclosure sale
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An apartment building in Ithaca, New York with 72 units was financed with a $7.2 million non-recourse first mortgage loan at a 3.6% annual interest rate and an additional $3.6 million fully recourse second mortgage loan at a 7.2% annual interest rate. The owner later borrowed another $720,000 with a fully recourse third mortgage loan at a 10.8% annual interest rate. The borrower ultimately found itself in financial distress and unable to make the monthly mortgage payments on the three outstanding mortgage loans and the property went into foreclosure. What happens to the claims of the second and third mortgage lenders if the foreclosure lawsuit by the first mortgage lender includes all junior mortgage lenders and the property is sold to an unrelated third party for a net price of $6.6 million at the foreclosure sale?
a. The mortgage liens of the junior claimants and the loan amounts owed to them are unaffected by the foreclosure sale
b. The mortgage liens of the junior claimants are extinguished but the loan amounts owed to them are unaffected by the foreclosure sale
c. The mortgage liens of the junior claimants are unaffected but the loan amounts owed to them are extinguished by the foreclosure sale
d. The mortgage liens of the junior claimants and the loan amounts owed to them are extinguished by the foreclosure sale
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