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C is corrent. When a mortgage is assumed the buyer becomes personally liable on the debt. The seller remains liable on the debt unless s/he is released by the mortgage holder. Thus, in assumption of a mortgage the buyer becomes the principal debtor and the seller has the rights and responsibilities of a surety. Upon default, the mortgagee may proceed immediately against either the principal debtor or the surety. Both are deemed to be liable on the debt. Thus, City may sue Sting or Miser.
A is incorrect. Both parties are immediately liable upon default. There is no requirement that the mortgagee (creditor) first sue the principal debtor before proceeding against the surety (original mortgagor).
B is incorrect. There is no requirement that both parties must be sued.
D is incorrect. There is no requirement that the mortgagee first sue the principal debtor before proceeding against the surety.