Elements of a Mortgage
- Security interest (the note),
- Writing (legal mtg), or physical delivery of deed (equitable mtg)
How does ME transfer interest in mortgage?
- Assignment, or
- Endorse and deliver note to holder in due course (HDC)
HDC protected from "personal defenses"
- HDC can foreclose on property, despite MR's assertion of "personal defenses"
- E.g., lack of consideration, fraud in the inducement, unconscionability, estoppel
HDC not protected from "real defenses" (MAD FIFIIII)
- Material Alternation
- Fraud In the Factune (e.g., lie about legal effect of instrument)
Assumption of mtg. versus Taking Subject to mtg.
- Assumption--personal liability (recourse)
- Taking subject--no personal liability (nonrecourse)
- Requires judicial action
- Creditors paid in order of priority
- Junior liens terminated; senior liens remain on property
- MR entitled to surplus (if any)
Equity of redemption
- MR can redeem up until foreclosure sale--pay remaining balance (and all other costs)
- Right to redeem in equity cannot be waived
- Can redeem w/i 6 months of foreclosure sale (pay foreclosure sale price)
- NY—no right to statutory redemption in NY