Stephen Gates bought Blueacre in 2001 for $10 million. He paid $1 million in cash and financed the rest with a loan from First Bank (FB) giving FB a mortgage which was promptly recorded.
In 2005, Gates took out another loan, this time from Second Bank (SB) which secured it with a mortgage on Blueacre, also promptly recorded. Shortly thereafter, Gates defaulted on his loan payments. He still owed $7 million to FB and $1 million to SB. The two banks foreclosed on Blueacre and a court conducted a foreclosure sale. The only bidder at the foreclosure sale was Bill Jobs, who bought the property for $6 million.
Which one of the following is true?
A. If this state has enacted anti-deficiency legislation, FB and SB should be able to sue Gates for the remainder of what he owes.
B. In most states, the sale could be set aside if the lenders cannot prove the price for the property was reasonable.
C. Even after the foreclosure sale to Jobs, some states would allow Gates to redeem the property by paying off the loan amount even after foreclosure.
D. SB should be entitled to a proportionate share of the $6 million proceeds.