Foreclosure is a remedy available to a mortgagee upon default in which there has always been close regard for the rights of the mortgagor. The rationale for foreclosure is not to punish a defaulting mortgagor or to express the court’s reservations about the conduct of the mortgagor. Its underlying rationale is to enable the mortgagee to recover payment of the debt for which it stands as security, to the extent the value of the property permits. A mortgagee has no inherent right or, absent prejudice, any equitable right to benefit from foreclosure to a greater extent than that.
Sometimes a mortgagee may get a default judgment for foreclosure. A motion can be brought to set aside the default judgment. The court has a broad jurisdiction to set aside default judgment and grant relief from foreclosure but a number of factors are considered before the court makes a decision. The factors include:
@ Whether the motion to set aside was made with reasonable promptness;
@ whether there is a reasonable prospect of payment at once or within a short period of time;
@ whether the applicant mortgagor has been active in endeavouring to raise the money necessary;
@ whether the applicant has a substantial interest in the property or the property has some special intrinsic value to him or her;
@ whether the property has been sold after foreclosure and whether the rights of the purchaser will be unduly prejudiced
@ whether the equities in favour of reopening the foreclosure order outweigh the equities against doing so. Weighing of the equities can’t be done without taking into account the relative prejudice to the respective parties, in making or not making the set aside order. *
William Poulos, Barrister
* This blog is not a substitute for legal advice. Should you require legal advice, a lawyer should be consulted to advise on the particular circumstances of your case.