Mortgage is a loan secured by a property. Here, a mortgage lender advances money to the borrower. In turn, the borrower must provide a real property as a security to the lender. Foreclosure is a right available to the lender to recover his outstanding money. If the borrower fails to repay the money borrowed within the due date, then the foreclosure right can be enforced.
The lender has a right to obtain a legal order from the court that the borrower should be totally prohibited of his right to redeem the property or a legal order that the property should be sold.
The foreclosure right can be enforced:
- If the money has become due for payment.
- If there are no contrary conditions in the mortgage deed.
There are different kinds of mortgage. Some of them are as follows:
- Simple Mortgage – The foreclosure right is not available for a simple mortgage. In this case, the remedy is to either proceed against the borrower personally or for the sale of the property.
- Usufructuary Mortgage – The foreclosure right is not available for a usufructuary mortgage also. In this case, the lender will have the possession of the property until the loan amount is totally repaid.
- Anomalous Mortgage – In case of an anomalous mortgage, the remedy depends upon the terms of the loan.
- English Mortgage – The lender can bring a suit for sale of the property, in case of English mortgage.
- Mortgage by Conditional Sale – If it is a mortgage by conditional sale, the loan matures into sale if the borrower fails to pay the debts.
- Mortgage by Deposit of Title Deeds – In case of mortgage by deposit of titles deeds, the remedy is to go for personal legal order or for sale of the property.
The lender may foreclose depriving the right of redemption. The right to institute a suit for foreclosure or sale is not available to a Lender for any work of maintenance in which the public is interested.
A Lender can hold two or more mortgages executed by the same borrower. In respect of each of such mortgages, he can have the right to obtain a legal order of foreclosure. In case he sues to obtain such a legal order on any one of the loans, he will be bound to sue on all the loans in respect of which the loan money has become due.