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General Mortgage Principles: Attitudes Change

This document provides an overview of mortgage principles and terms. It defines key concepts like mortgagor and mortgagee. It also outlines different types of mortgages and common mortgage clauses around insurance, repairs, acceleration of payments, and foreclosure. The document concludes by discussing assignment and discharge of mortgages, remedies for default, and sources used.

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90 views10 pages

General Mortgage Principles: Attitudes Change

This document provides an overview of mortgage principles and terms. It defines key concepts like mortgagor and mortgagee. It also outlines different types of mortgages and common mortgage clauses around insurance, repairs, acceleration of payments, and foreclosure. The document concludes by discussing assignment and discharge of mortgages, remedies for default, and sources used.

Uploaded by

Freelansir
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GENERAL MORTGAGE

PRINCIPLES

„ LESSON #4

Instructor: Larry Wosk

BRIEF RE-CAP OF MORTGAGE


HISTORY
„ ALWAYS BEEN A SECURITY FOR A DEBT

„ ROLE OF THE CHURCH

ATTITUDES CHANGE

„ USURY RULES RELAXED OVER TIME AND


INTEREST COULD BE CHARGED

1
DEFINITIONS
„ MORTGAGOR

„ MORTGAGEE

FORMS OF MORTGAGE
„ FREEHOLD MORTGAGE

„ LEASHOLD MORTGAGE

TYPES OF MORTGAGE
EXPANDING LIST:
„ PURCHASE –MONEY MORTGAGE
„ MORTGAGE CONSORTIUMS
„ SPECIFIC AND FLOATING CHARGES
„ COLLATERAL MORTGAGES
„ BLANKET MORTGAGES

2
PURCHASE-MONEY MORTGAGE

„ ALSO “VENDOR TAKE-BACK” MORTGAGE

MORTGAGE CONSORTIUM
„ FORMED BY A GROUP OF LENDERS
WHERE THE LOAN REQUIREMENT IS TOO
LARGE FOR ONE LENDER.

„ DEBENTURE

SPECIFIC AND FLOATING


CHARGES

„ DEBENTURE

„ TRUST DEED

3
COLLATERAL MORTGAGES
„ WHERE OTHER REAL PROPERTY IS
MORTGAGED TO PROVIDE ADDITIONAL
SECURITY FOR THE DEBT

10

BLANKET MORTGAGES
„ MULTIPLE PARCELS OF REAL PROPERTY
PLEDEGED AS SECURITY FOR A SINGLE
LARGE LOAN.

11

INTEREST ACT
„ INTEREST CALCULATED SEMI-
ANNUALLY, NOT IN ADVANCE
„ INTEREST ON ARREARS CANNOT
EXCEED THE RATE OF INTEREST
PAYABLE FOR THE MORTGAGE

12

4
CRIMINAL CODE
„ NO INTEREST OVER 60%

13

LENDER HAS TWO TYPES OF


SECURITY
„ PERSONAL COVENANT OF BORROWER

„ SECURITY ON THE LAND

14

SELECTED MORTGAGE
CLAUSES
„ ACCELERATION
„ OMNIBUS
„ INSURANCE CLAUSE
„ STRATA VOTE
„ SALE OF PROPERTY

15

5
ACCELERATION CLAUSE
IN DEFAULT OF ANY PAYMENT, AT THE
OPTION OF THE LENDER
„ THE TOTAL PRINCIPAL BALANCE
BECOMES DUE IMMEDIATELY

16

OMNIBUS CLAUSE
„ ALLOWS THE MORTGAGEE (LENDER) TO
PAY FOR THINGS THAT THE
MORTGAGOR (BORROWER) WAS
SUPPOSED TO PAY AND DIDN’T.

17

INSURANCE CLAUSE
„ LENDERS ALMOST ALWAYS REQUIRE
PROOF OF INSURANCE COVERAGE TO
THE FULL REPLACEMENT VALUE OR AN
AGREED AMOUNT

18

6
REPAIR CLAUSE
„ THE BORROWER WILL KEEP THE LANDS
AND BUILDINGS IN GOOD REPAIR

19

STRATA VOTE
„ BORROWER WILL OBSERVE THE RULES

„ LENDER IS ASSIGNED THE RIGHT VOTE

20

RIGHTS AND DUTIES OF


MORTGAGOR
„ POSSESSION

„ RIGHT TO PREPAY

„ DUTIES OF MORTGAGOR

21

7
IN THE EVENT OF SALE OF THE
LANDS

„ THE FULL AMOUNT OF THE INTEREST


AND PRINCIPAL IS DUE AND PAYABLE AT
THE OPTION OF THE LENDER

22

ASSIGNMENT OF MORTGAGES

„ A MORTGAGE LENDER MAY SELL ITS


MORTGAGES

23

DISCHARGE OF MORTGAGE
„ WHEN A MORTGAGE IS PAID IN FULL THE
LENDER MUST DISCHARGE - TO
REMOVE THE CHARGE

24

8
BANKRUPTCY
„ THE MORTGAGEE IS A SECURED
LENDER

25

REMEDIES ON DEFAULT
„ ACTION ON THE COVENANT
„ POSSESSION
„ APPOINTMENT OF A RECEIVER
„ ASSIGNMENT OF RENTS
„ FORECLOSURE

26

FORECLOSURE
„ EXTINGUISHES BORROWER’S RIGHT TO
REDEEM MORTGAGED PROPERTY
STEPS:
1. Petition
2. Order nisi of foreclosure

27

9
FORECLOSURE (2)

3. Order absolute of foreclosure

4. Court discretion to re-open

28

CONTRACTUAL POWER OF SALE

„ By contractual right

„ By foreclosure

„ By judicial sale

29

SOURCES:
„ Baxter, D., Hamilton,S.W., & Ulinder, D.D.
Real Estate Finance in a Canadian Context
(1998) UBC Real Estate Division

30

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