When a borrower defaults on their mortgage, foreclosure can result. Foreclosure is a procedure by which the mortgagee (lender) goes to court to try to recover on its loan. After preparing its petition and ensuring that all interested parties are served, the mortgagee will make an application for an Order Nisi with the courts.
As part of the Order Nisi, the courts will normally set a Redemption Period of 6 months. The redemption period is a time period within which a defaulting mortgagor has to pay what is due and owing under the mortgage in order to “redeem” the mortgage and retain its interest in the mortgaged property. In order to redeem the mortgage during the Redemption Period, a mortgagor must pay the full amount outstanding on the mortgage plus all interest and costs, to the date of redemption.
If the mortgagee is unable to pay the mortgagee back during the redemption period, the court may order a sale of the property, or may grant an Order Absolute, in which case the mortgagee loses the property. With an Order Absolute, title to the property is granted to the mortgagor and all subsequent charges are removed from title.
If there are any subsequent chargeholders (example: 2nd or 3rd mortgagees) who are in jeopardy of having their interest in the real property extinguished by the foreclosure process, such subsequent chargeholders can make an application for Conduct of Sale prior to the expiration of the Redemption Period. If granted, the subsequent chargeholders can have the property listed for sale with the hope that the proceeds of any sale are sufficient to pay them out.
Failure to respond to a foreclosure proceeding in a timely manner can have devastating consequences. We represent mortgagees and mortgagors and will work with you to try to resolve your dispute out of court if possible. If this is not possible, however, we have the experience to bring or defend foreclosure proceedings.