the historical development of the mortgage. the original mortgage: mr me deed of fee simple subject...
TRANSCRIPT
![Page 1: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/1.jpg)
The HistoricalDevelopment
of the Mortgage
![Page 2: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/2.jpg)
The original mortgage:
MR MEdeed of fee simplesubject to condition
subsequent
A "dead pledge."
![Page 3: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/3.jpg)
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
![Page 4: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/4.jpg)
Foreclosure of the equity of redemption:
The court would set an outside date beyond which the MR could no longer redeem.
![Page 5: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/5.jpg)
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.
![Page 6: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/6.jpg)
The rule against "clogging":
If the MR (in the mortgage) purported to waive the right to redeem in equity...
that waiver was deemed unenforceable.
![Page 7: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/7.jpg)
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)
![Page 8: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/8.jpg)
beforedefault & accel.
after default & accel.
default & accel. foreclosure
post-foreclosure
Period of equitable redemption
Period of statutory redemption (in about 20 states)
![Page 9: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/9.jpg)
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.)
![Page 10: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/10.jpg)
Now we’re going to consider situations in which there’s more than one mortgage on the same
property.
![Page 11: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/11.jpg)
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, orthe parties agree to change priorities
MR
ME2
ME1
![Page 12: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/12.jpg)
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.
![Page 13: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/13.jpg)
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."
![Page 14: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/14.jpg)
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.
MR ME1mortgage
MR ME2mortgage
![Page 15: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/15.jpg)
MR ME1mortgage
MR ME2mortgage
MR Tenantlease
Assume ME1 forecloses first.
![Page 16: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/16.jpg)
MR ME1mortgage
MR ME2mortgage
MR Tenantlease
BFcl.
![Page 17: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/17.jpg)
MR ME1mortgage
MR ME2mortgage
MR Tenantlease
Assume ME2 forecloses first.
![Page 18: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/18.jpg)
MR ME1mortgage
MR ME2mortgage
MR Tenantlease
B
![Page 19: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/19.jpg)
MR ME1$30,000
MR ME2$15,000
MR Tenantlease
FMV of property = $50,000
![Page 20: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/20.jpg)
If ME1 forecloses, and the high bid is $50,000, how will the money be distributed?
ME1: $30,000ME2: $15,000T : bonus value of
lease, if any [?]MR : $ 5,000
![Page 21: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/21.jpg)
Same facts, but the bid at the sale is only $40,000.
ME1: $30,000ME2: $15,000
ME2 has a deficiency claim against MR for $5,000.Does T have a claim against MR?
![Page 22: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/22.jpg)
Why are junior mortgages more risky than senior mortgages?
?
![Page 23: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/23.jpg)
MR ME1$30,000
MR ME2$15,000
MR Tenantlease
FMV of property = $50,000
![Page 24: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/24.jpg)
Again assume $50,000 FMV.
If you bid at a foreclosure by ME1, how high would you bid?
✌
If you bid at a foreclosure by ME2, how high would you bid?
![Page 25: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/25.jpg)
At ME2's foreclosure sale, assume the bid is $20,000.How will the funds be distributed?
![Page 26: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/26.jpg)
At ME2's foreclosure sale, assume the bid is $20,000.How will the funds be distributed?
ME2: $15,000T : bonus value, if any [?]MR: $ 5,000
![Page 27: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/27.jpg)
Why does ME1 receive none of the proceeds of ME2's foreclosure?
(Because the foreclosure by ME2 does not impair ME1's rights at all; ME1 may still foreclose later.)
![Page 28: The Historical Development of the Mortgage. The original mortgage: MR ME deed of fee simple subject to condition subsequent A "dead pledge."](https://reader036.vdocuments.us/reader036/viewer/2022070411/56649cc15503460f94987ca1/html5/thumbnails/28.jpg)
The End