Originally published in Blakes Bulletin on Real Estate
Mortgage Enforcement, October 2008
An indispensable initial step in the choice of the appropriate
mortgage enforcement strategy involves the gathering of information
by the lender and its legal advisors concerning the distressed
loan. The goal of the information-gathering process is to obtain a
complete understanding of the relevant facts and circumstances so
that they may be collectively considered and the proper enforcement
Information and documentation which should be obtained,
collected and considered by the lender prior to choosing a mortgage
remedy includes the following:
copies of the commitment letter, loan/credit agreement,
mortgage and all collateral security documentation;
any appraisals obtained by the lender at the time of making the
loan or subsequent thereto;
a survey of the mortgaged property;
a solicitor's report on the closing of the mortgage loan
copies of any demand letters that have been issued by the
lender to the borrower to date;
the name of the present owner of the mortgaged property, the
address of the mortgaged property and other known addresses of the
borrower, any guarantors under the mortgage, and the spouse of the
owner of the mortgaged property (if the mortgaged property is
potentially a matrimonial home);
a brief legal description of the mortgaged property;
credit reports, if any, on the original borrower, any
guarantors and the current owner of the mortgaged property;
information as to whether the mortgaged property is vacant or
occupied and, if occupied, the names and status of the occupants as
owners or tenants;
the amount owing on the mortgage for principal and interest,
and the amount of all disbursements made by the lender and its
counsel for realty taxes, insurance premiums, legal fees, and any
other items that may be added to the borrower's indebtedness to
confirmation that fire and other property insurance coverage is
copies of any notices of any liens or other interests in the
mortgaged property received by the lender (e.g., liens in favour of
any taxing authorities for unpaid taxes);
the date of default under the mortgage;
a copy of any demand for payment made on the owner of the
mortgaged property, subsequent encumbrancers or guarantors and
details of any payments made in response to such demands; and
details of any assignment of the mortgage to the current holder
of the mortgage, where applicable, and a copy of any notice to the
borrower of such assignment.
The information in the list above will not only assist the
lender in determining which particular mortgage remedy or remedies
it will wish to pursue (i.e., power of sale versus foreclosure or
judicial sale), but will also help the lender comply with what are
often strict technical rules of compliance in connection with the
mortgage remedy to be pursued (e.g., the manner in which a notice
of sale must be issued in connection with the use of the power of
The commitment letter, loan/credit agreement, mortgage and
collateral security documentation should be reviewed by legal
counsel as soon as possible in the proceedings in order to
determine the events of default prescribed thereunder as well as
the remedies available to the lender pursuant thereto upon the
occurrence of an event of default.
A prudent lender will find itself well served by gathering this
information at the earliest possible opportunity when a default
appears imminent or after it has occurred. Good record-keeping can
be invaluable as decisions will likely have to be made quickly and
there may be delays in enforcement of the security if such
documentation is not readily available.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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