Equity of Redemption
Even after the mortgage debt is formally accelerated by the bank, declaring the entire balance due, the mortgagor (borrower) always has the right to pay off the mortgage amount before the referee’s hammer falls at the foreclosure auction. This payment by the borrower will discharge the debt and require the mortgagee (lender) to issue a “satisfaction of mortgage” to be recorded in the chain of title.
- Example : Jake defaulted on his mortgage payments. Star Bank gave Jake a 90 day notice and then formally accelerated the entire mortgage balance of $250,000 due. Star Bank then sued on the mortgage to have the property sold at auction. Two days before the scheduled foreclosure auction, Jake gave Star Bank a certified check for $250,000. Star Bank must now issue a satisfaction of mortgage to Jake and the property may no longer be sold at auction.