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

10