The Wagners Entered into a Contract with Crummy Construction Under

question 16

Multiple Choice

The Wagners entered into a contract with Crummy Construction under which Crummy agreed to do $33,000 worth of remodeling of the Wagner home.Crummy agreed that the contract price could be paid in installments,and that to secure these payments,Crummy would take out a second mortgage on the Wagner home.The day after signing the contract,the Wagners had second thoughts and immediately hand-delivered a written notice to Crummy stating that they wanted to rescind the contract.Can they do so?

• A)Yes,under the rescission right of the Truth in Lending Act.
• B)No,because the transaction involved more than $25,000 and was,therefore,not covered by the rescission right in the Truth in Lending Act.
• C)No,because the rescission right in the Truth in Lending Act does not apply to transactions in which the creditor takes a mortgage to secure the loan.
• D)Yes,under the rescission right provided by TILA as their house wasn't used as collateral.

---

Definitions:

Mortgage Loan

A loan secured by real property through the use of a mortgage note, used by purchasers of real property to raise funds to buy real estate.

Interest

Interest refers to the cost of borrowing money, usually expressed as a percentage of the principal loan amount, or the income earned from investment.

Mortgage

A type of loan specifically used to purchase real estate, in which the property itself is used as collateral against the debt.

Lender's Investment

The amount of money lent by a creditor to a borrower, expecting a return on the investment often through interest or profits.