Also known as: mortgage foreclosures · foreclosure of mortgage · foreclosure
Written by attorneys · grounded in primary & secondary sources — see below
The process by which a mortgagee terminates the mortgagor's equity of redemption and obtains the property or its value. Types include judicial foreclosure through court action, power-of-sale or nonjudicial foreclosure under the mortgage or deed of trust and state statute, and strict foreclosure in limited jurisdictions. The mortgage or statute dictates the procedure, which affects notice, sale, and redemption rights.
Meredith Maxwell granted a mortgage on her home to Meridian Motors under a title-theory jurisdiction. When Meredith defaulted, Meridian initiated foreclosure and took possession of the property as legal title holder while Meredith retained only the equity of redemption. The court confirmed that Meridian could proceed directly to sale without first obtaining a separate possessory judgment.
Monarch Pharmaceuticals purchased land subject to an appurtenant easement benefiting Miles Montgomery's adjacent parcel. After Monarch defaulted on its mortgage, the lender foreclosed and sold the land at auction. The buyer took title subject to the easement because the mortgage lien was junior to the servitude.
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During a statewide economic crisis, the legislature enacted a temporary moratorium on mortgage foreclosures. A lender challenged the statute under the Contract Clause after it prevented immediate foreclosure on Malcolm McKinley's commercial property. The court upheld the moratorium because it served an important public purpose and was narrowly tailored to the emergency.
A judgment creditor obtained a charging order against Monica Morgan's transferable interest in a partnership. After distributions failed to satisfy the judgment within a reasonable time, the court ordered foreclosure of the charging order lien and directed sale of the interest. The purchaser acquired only the transferable interest and did not become a partner.
Madison Meyers defaulted on her mortgage to Maxwell Manufacturing. To avoid foreclosure proceedings, Madison voluntarily conveyed the property to the lender in exchange for full discharge of the debt. The transaction was upheld because it was voluntary, supported by consideration, and free of duress.
Michelle Murphy granted a conservation servitude on her land before executing a mortgage to Marathon Logistics. When Marathon later foreclosed its junior lien, the purchaser at the sale took the property subject to the earlier servitude. The servitude remained enforceable because the mortgage lien lacked priority over it.
The mortgagor retains the equity of redemption, which permits payment of the full debt to reclaim the property. Any agreement that unreasonably restricts or waives this right is generally void as against public policy.
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Surplus after satisfying the foreclosing mortgage is applied first to junior lienholders in order of priority and then to the mortgagor. A junior lien extinguished by foreclosure loses its security but may still pursue a deficiency claim if permitted by state law.
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A receiver may be appointed when waste by the mortgagor threatens the property value or when rents and profits are needed to protect the mortgagee's interest. The mortgagee may also intercept rents if the mortgage covers them.
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…function to denigrate. Indeed, in the present case, it is indicated that because disability benefits were terminated there was a foreclosure upon the Eldridge home and the family's furniture was repossessed, forcing Eldridge, his wife, and their children to sleep in one bed. Tr. of Oral Arg. 39, 47-48. Finally, it is also no…