a note for that amount secured by a mortgage on her farm.

Several years later, at a time when the woman still owed the

bank $750,000 on the mortgage loan, she sold the farm to

a man for $900,000. The man paid the woman $150,000 in

cash and specifically assumed the mortgage note. The bank

received notice of this transaction and elected not to exercise the optional due-on-sale clause in the mortgage.

Without informing the man, the bank later released the

woman from any further personal liability on the note.

After he had owned the farm for a number of years, the man

defaulted on the loan. The bank properly accelerated the

loan, and the farm was eventually sold at a foreclosure sale

for $500,000. Because there was still $600,000 owing on the

note, the bank sued the man for the $100,000 deficiency.

Is the man liable to the bank for the deficiency?

(A) No, because the woman would have still been primarily

liable for payment, but the bank had released her from

personal liability.

(B) No, because the bank’s release of the woman from personal liability also released the man.

(C) Yes, because the bank’s release of the woman constituted a clogging of the equity of redemption.

(D) Yes, because the man’s personal liability on the note

was not affected by the bank’s release of the woman

(http://www.autoadmit.com/thread.php?thread_id=5311573&forum_id=2#46087602)

"(D) Yes, the man is liable to the bank for the deficiency.

When the man purchased the farm, he specifically assumed the mortgage note, which means he agreed to be personally liable for any remaining debt on the loan. The bank's release of the woman from personal liability on the note does not affect the man's liability. The release only means that the woman is no longer personally responsible for paying the remaining debt.

Option (A) is incorrect because the bank released the woman from personal liability, and she is no longer primarily liable for payment.

Option (B) is also incorrect because the bank's release of the woman does not release the man from his personal liability as he specifically assumed the mortgage note.

Option (C) is incorrect because clogging of the equity of redemption occurs when a mortgagee seeks to restrict or prevent a mortgagor from redeeming the property by imposing unreasonable conditions. The bank's release of the woman does not constitute a clogging of equity of redemption."

(http://www.autoadmit.com/thread.php?thread_id=5311573&forum_id=2#46087676)

sometimes these easy ones trip people up because of how easy they are. man assumes mortgage, women is released from it. if he defaults, he is liable. simple as, right? C seems thrown in there because few people will know what "clogging the equity of redemption is" and might select it because it seems more specific, but that's often a trap. and some people might might overthink it and choose A or B because they think it's some sort of trick.

a lot of time on the MBE (and most standard tests) the answer is just "Yes" or some other simple explanation, and the "No" responses will have these long explanations. And people think it must be one of the three "Nos" because the yes is too easy and the nos have specific explanations.

(http://www.autoadmit.com/thread.php?thread_id=5311573&forum_id=2#46087721)

like, how often does the mailbox rule come into play IRL? yet it's always tested on the bar and contracts exams in LS. let alone something like rule against perpetuities.

(http://www.autoadmit.com/thread.php?thread_id=5311573&forum_id=2#46087879)

edit: I read his assumption of the mortgage as not being okay'd by the bank. My assumption was that she was supposed to be paying on it, didn't, and got away with no longer having personal responsibility. It's D.

(http://www.autoadmit.com/thread.php?thread_id=5311573&forum_id=2#46088841)