If a homeowner defaults on a mortgage and the property is sold at auction, who receives the surplus funds?

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Multiple Choice

If a homeowner defaults on a mortgage and the property is sold at auction, who receives the surplus funds?

Explanation:
When a property is sold to satisfy a defaulted mortgage, the sale proceeds first pay off the lender’s loan balance and the costs of the sale. If there is any money left after those obligations are satisfied, it belongs to the person who originally borrowed the money and owned the property—the mortgagor. The lender does not keep the surplus, and a trustee isn’t involved in a standard mortgage sale. So the leftover funds go back to the mortgagor.

When a property is sold to satisfy a defaulted mortgage, the sale proceeds first pay off the lender’s loan balance and the costs of the sale. If there is any money left after those obligations are satisfied, it belongs to the person who originally borrowed the money and owned the property—the mortgagor. The lender does not keep the surplus, and a trustee isn’t involved in a standard mortgage sale. So the leftover funds go back to the mortgagor.

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