Question

A husband and wife go to a casino and lose $200,000, mostly on a credit line they opened with the casino. The casino starts foreclosure on the couple's home. If the foreclosure is successful, how much will the couple be allowed to keep from the equity in their home?

a) $7,500.
b) $30,000.
c) $15,000.
d) $0.

Answer 1

The couple will be allowed to keep their equity in their home, which is $0.

Step-by-step explanation:

To determine how much the couple will be allowed to keep from the equity in their home, we need to know the value of their house and how much they owe to the bank. The question provides two examples:

For Freda, the value of her house is $250,000 and she owes zero to the bank, so her equity is the whole $250,000.

For Frank, the value of his house is $160,000 and he owes $60,000 to the bank, so his equity is $100,000.

Based on these examples, we can see that the couple will be allowed to keep their equity in their home. Therefore, the correct answer is d) $0.