Humber/Ontario Real Estate Course 3 Exam Practice

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If Mr. and Mrs. Quinn received a notification to make mortgage payments to XYZ Capital Trust instead of ABC Finance, to whom they initially took out their mortgage, they:

  1. Should consult a lawyer, as transferring the mortgage without their consent is illegal.

  2. Cannot have their mortgage reassigned without their approval as per implied covenants.

  3. Cannot challenge the assignment since the mortgagee has a legal right to reassign the mortgage.

  4. Have the right to withhold mortgage payments due to violation of mortgage terms.

  5. Should continue payments to ABC Finance until further notice.

  6. Can renegotiate the terms of their mortgage with XYZ Capital Trust.

The correct answer is: Should consult a lawyer, as transferring the mortgage without their consent is illegal.

In this context, the correct choice highlights the importance of consent in the transfer of mortgage obligations. When Mr. and Mrs. Quinn receive a notification to redirect their mortgage payments to a different entity, it raises a significant legal issue regarding the transfer of their mortgage. Mortgage agreements typically contain provisions regarding assignments and transfers. If a mortgage is assigned from one lender to another, this process generally requires the borrower’s consent, especially if the original agreement does not explicitly allow for such actions without consent. Thus, if Mr. and Mrs. Quinn did not approve or were unaware of this transfer, they could argue that it was not legally valid. Consulting a lawyer would be a prudent step for them to understand their rights related to this assignment and ensure that it complies with applicable laws. The other options present different scenarios or misconceptions about the possible actions the Quinns could take. For instance, while the reassignment of the mortgage typically involves legal rights, there is still a need for the original borrower’s consent unless otherwise stipulated. Therefore, the best course of action, given the situation, is to seek legal advice to address any potentially illegal transfers or assignments.

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