Question

Anderson conveys his house to a grantee for $10,000 and takes back a trust deed and note for $5,000. Anderson immediately sells his note and trust deed at a discount to Mr. Baker for $3,500. Anderson signs the trust deed and endorses the note with the words "without recourse" prior to his signature. If the grantor defaults before making any principal payments, which of the following methods would the buyer of the first trust deed utilize to receive the greatest amount of money in the shortest period of time?

A. Sue for specific performanceB. Foreclosure by trustee's sale to collect $3,500C. Recover from Anderson, as the transaction was usuriousD. Foreclosure by trustee's sale to recover $5,000

Answer 1

The answer is: D. Foreclosure by trustee's sale to recover $5,000

Step-by-step explanation:

A trustee sale is the sale of a property in foreclosure due to default in a loan. In this case the grantor never paid any money before defaulting, so the lender can attempt to recover the maximum possible amount.

Since Anderson endorsed the note as "Without Recourse", he assumes no liability in the event of a default.