Mortgage default: possession, relief and judicial discretion

Abstract

At common law, and whether or not there is default on the part of the debtor, the legal mortgagee enjoys the proprietary right to take actual possession of mortgaged property for any purpose: ‘… before the ink is dry on the mortgage.’ Although technically this is an absolute right, in practice possession will be sought only if the borrower is in breach of the mortgage agreement. The danger remains, however, that such an unqualified right may be arbitrarily used by a capricious mortgagee. Any minor and temporary default might be seized upon by the lender as justification for taking possession and, subsequently, selling the property. This would deprive the mortgagor of any opportunity to remedy the default. The lender could, thereby, render the borrower homeless simply to rid itself of the inconvenience of a problem debtor.