The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."
The "equity of tardy redemption": Even though MR did not pay on law day, the equity courts would permit MR to pay late and redeem the land. 12 3 6 9
Foreclosure of the equity of redemption: The court would set an outside date beyond which the MR could no longer redeem.
Strict foreclosure: The ME simply kept the land. Foreclosure by sale: The land was sold and the ME received the proceeds of the sale, with the remainder going to the MR.
The rule against "clogging": If the MR (in the mortgage) purported to waive the right to redeem in equity... that waiver was deemed unenforceable.
Acceleration of an installment loan: After a default, the lender declares the entire balance due and payable. (requires a clause in the note or mortgage so providing)
before default & accel. after default & accel. foreclosure post- foreclosure Period of equitable redemption Period of statutory redemption (in about 20 states)
Equitable redemption: Available in all states. (To redeem, you pay the debt.) Statutory redemption: Available in about 20 states. (To redeem, you pay the amount that was bid at the foreclosure sale.)
Now we’re going to consider situations in which there’s more than one mortgage on the same property.
Mortgage 1 Mortgage 2 Multiple mortgages can be placed on the same real estate. Their priority depends on their chronological order unless: some mortgagee fails to record, or the parties agree to change priorities MR ME2 ME1
What determines the order in which the mortgages are foreclosed? ■It has nothing to do with their priority: ■Either the first or the second mortgage might foreclose first. ■It depends on which lender experiences a default and loses patience first.
What Happens in Foreclosure ■The mortgage being foreclosed is wiped off the title. ■So are all mortgages and other interests of lower priority (if they’re properly served and made parties). ■But interests with higher priority are not affected by the foreclosure. ■So we say "Foreclose down."
A mortgage can only be foreclosed “down”: ■ME1 can foreclose against ME2 and wipe out ME2's mortgage. ■But ME2 can’t foreclose against ME1 at all. MRME1 mortgage MRME2 mortgage