Phillip Owns a Home in Fee Simple, Which He Subsequently

question 38

Essay

Phillip owns a home in fee simple, which he subsequently mortgages for $150,000 to the Empire Bank. Two years later Phillip decides to move to another city and sells the property to Carl, who assumes the mortgage to the Empire Bank. Carl is later laid-off from work and runs into serious financial difficulties resulting in the mortgage going into default. Describe the options open to the Empire Bank with respect to each of the parties and follow these options through to their natural conclusion. Speculate as to any mechanisms which may commonly be put in place for greater certainty between the parties on the assumption of a mortgage.

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Definitions:

Equilibrium Constant

A number that expresses the ratio of products to reactants at equilibrium for a chemical reaction, indicating the extent of the reaction.

Ammonia

A colorless gas with a characteristic pungent smell, consisting of nitrogen and hydrogen (NH3), used as a fertilizer and cleaning agent.

Catalyst

A material that accelerates the speed of a chemical reaction without experiencing any lasting chemical alteration.

Acid Equilibrium

The state of balance between the forward and reverse reactions in which an acid donates a proton to a base.