Mortgage equity of redemption foreclosure and power of sales

Question: what is meant by mortgage equity of redemption foreclosure and power of sales explain the importance of registration and the priority between first second and third mortgages

Equity of redemption is a law that is based on the doctrine of equity on the ground that a mortgage is pledge for securing the payment of the property. According to Sealy and Hooly (2008), the equity of redemption differs from the right of redemption in that the former has the equity of redemption until the sale and has the right of redemption if it is provided by the statutes. According to Sealy and Hooly (2008), mortgage foreclosure is the legal process of forcing the sales of assets used in collateral loan in the circumstances where the lender attempts to recover the balance of a loan from a property buyer who has refused to clear payments for such a property. Initially, the lender must obtain the right of redemption before processing with his debt recovery plans from the mortgage owner. The foreclosure by the power of sales is a regulation of the mortgage document that empowers the lender to regain the amount due on his property by selling the property in case where the payments are not met as agreed. The power of sales is a legal protection to the seller that preauthorizes him to regain his property through selling it in a way of non-judicial foreclosure.

The importance of registration of a mortgage is that it allows for ascertaining the rightful owner of the property with the aim of eliminating quacks and property theft in addition of enabling the property to passed easily without any difficulty of proving the right ownership of the property. Priorities are given differently between the first, second, and third mortgages depending on their position to the property. The first mortgage has exclusive priority over other liens, such that the mortgage that is in the first position has priority over the second and the third in case of default on monthly payments. The second mortgages is a type of mortgage made while the first mortgage is still in effect such that the original mortgage will receive be given priority in the case of monthly default.

 

Reference

 Sealy.L. S & Hooley, R.J. (2008). Commercial Law: Text, Cases, and Materials. Oxford University Press; 4th edition