Illustrate the mortgagee’s remedies upon default

Question

Illustrate the mortgagee’s remedies upon default?

Answer 1

The mortgagee’s remedies upon default are as follows:

1. Sue: Like any creditor, a mortgagee can sue a mortgagor on the basis of the covenant to pay contained in the mortgage.

2. Possession: Mortgagee may take possession of property.

3. Foreclosure: Mortgagee may proceed with an action for foreclosure, whereby the court will end the right of mortgagor to redeem the property if it is not paid within a fixed time (generally six months from the date of the hearing).

4. Sale by court: Mortgagee may request to have the property sold under the court's supervision, by tender or auction. If sale proceeds exceed principal, interest, and expenses of court action and sale, surplus is returned to mortgagor or to other secured creditors of property; if there is a deficiency, mortgagee may obtain judgment against mortgagor for that amount.

5. Sale of land by mortgagee under power of sale: Mortgagee may sell property without court action or supervision; the same rules apply concerning the proceeds as in a sale by the court.