This discussion board is open for any questions or comments in a new thread, but

Question

This discussion board is open for any questions or comments in a new thread, but please address the following:

1. What happens when a secured party and an unsecured party claim security interests in the same collateral? Is that fair? Why or why not?

2. How might a notice of default and foreclosure actually benefit a debtor who is behind on payments?

3. Should the federal government regulate the advertising of real property and mortgages on the Internet to protect consumers from potential fraud? Why or why not? If so, what kind of regulations would be appropriate, and how might they be enforced?

Explanation / Answer

Answer1- Secured creditors get precedence over unsecured creditors when both claim security interests in the same collateral. It is fair because of the nature of precautions taken by secured parties in getting collaterals attached to a debt or loan.

Answer 2 - A notice of default and foreclosure may be helpful to remind debtor of his payment dues. There may be a genuine case that debtor missed a payment by mistake. Further, if the notice prompts a payment, the credit ratings of the debtor are not downgraded. Given the history of debtors and payments in an area, a company may make available credit at a cheaper cost if the number of defaults is less in that area. Lastly, in case the value of the collateral bought has reduced considerably, the debtor may be better off to foreclose the credit by selling the collateral.

Answer 3 - Yes, the federal government must regulate the advertising of real property and mortgages. The advertising must not lead someone to make a purchase that is less beneficial in actual compared to what is depicted in the advertisement. The consequences are severe in real-estate purchases wherein people put millions of dollars in purchasing a perfect place. The kind of regulations appropriate for such a case are:

The regulations can be enforced through State Governments. Each State Government must enact strong directives to regulate the advertising and content that is broadcasted. In case particular ad involves interstate commerce or transaction, it can be taken up by Federal regulations in case of a dispute.

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