Online Encyclopedia

FORECLOSURE

Online Encyclopedia
Originally appearing in Volume V10, Page 644 of the 1911 Encyclopedia Britannica.
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FORECLOSURE, in the law of mortgage; the extinguishment by order of the court of a mortgagor's equity of redemption. In the law of equity the object of every mortgage transaction is eventually the repayment of a debt, the mortgaged property being incidental by way of security. Therefore, although the day named for repayment of the loan has passed and the mortgagor's estate is consequently forfeited, equity steps in to mitigate the harshness. of the common law, and will decree a reconveyance of the mortgaged property on payment of the principal, interest and costs. This-right of the mortgagor to relief is termed his " equity of redemption." But the right must be exercised within a reasonable time, :otherwise he will be •foreclosed his equity of redemption and the mortgagee's possession converted into an absolute ownership. Such fore-closure is enforced in equity by a foreclosure action. An action is brought • by the mortgagee against the mortgagor in the chancery division of the High Court in England, claiming that an account may be taken of the principal and interest due to the mortgagee, and that the mortgagor may be directed to pay the same, with costs, by a day to be appointed by the court and that in default thereof he may be foreclosed his equity of redemption. English county courts have jurisdiction in fore-closure actions where the mortgage or charge does not exceed £Soo; or where the mortgage is for more than Soo, but less than that sum has been actually advanced. In a Welsh mortgage there is no right to foreclosure. (See also MORTGAGE.)
End of Article: FORECLOSURE
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