Mortgage actions

What are mortgage actions

A party who pledges a property as security for a loan is the mortgagor, while the party who provides the loan is the mortgagee. If the mortgagor fails to repay the mortgagee the sum of money owed, the mortgagee may start mortgage actions against the mortgagor.

A mortgage action Originating Application (OA) is an application for one or more reliefs and is usually made by a mortgagee bank. Mortgage actions may contain claims for any of the following reliefs:

• Foreclosure.
• Redemption.
• Sale of the mortgaged property.
• Delivery of possession by the mortgagee.
• Payment of money secured by the mortgage.
• Reconveyance of the property or its release from the security.
• Delivery of possession (whether before or after a foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property.

Receiving a mortgage action Originating Application

If you receive a mortgage action OA, it usually means:

• The bank has asked the court to order that you surrender the mortgaged property and pay the outstanding sum of money owed to the bank.
  • You may also be asked to pay the legal costs incurred by the bank in making the OA application.
    

You should read the documents carefully. Check that the amount of arrears (the instalments which you did not pay) and the total loan amount (including late payment interest) are correct.

You will also have to attend court for a hearing at the date and time stated in the OA.

How to respond

Refer to the following to find out how you can respond to the OA, depending on your circumstances:

Attending the mortgage action hearing

You must attend the hearing. If you are absent, the court may grant the order in favour of the bank and you may be required to surrender the mortgaged property to the bank and pay the outstanding sums due.

At the hearing

Depending on your case, you may do any of the following at the hearing:

• Agree to the court granting the reliefs sought, such as the order to deliver possession to the bank.
• Request for more time to sell your property.
  
• Request for more time to pay the remaining amount.
  • If you managed to settle a substantial part of the amount stated in the OA before the hearing, you should inform the court how much you have paid so far and how much time you will likely need to pay the remaining amount.
• (If you proposed an alternative repayment scheme and it was rejected by the bank) Make a better repayment proposal to the bank.

After hearing your reasons and the bank's response to your requests, the court may:

• Adjourn (postpone) the hearing to give you more time to make a better repayment proposal.
• Adjourn the hearing to give you more time to pay the remaining amount owed.
• Make an order for you to pay the outstanding sum of money as well as interest and the legal costs incurred by the bank and to deliver possession.

If an order for possession is made

If the court makes an order for possession, it means that the bank will be able to take possession of the mortgaged property.

In some cases, the court may order the bank to give you some time before it takes possession of the mortgaged property. If the court makes such an order, the bank cannot take possession of the property until after the date and time set by the court. This is to enable you to make arrangements to move out before the bank takes possession.

If the court did not order the bank to give you some time, you will be required to give possession of the mortgaged property to the bank immediately. The bank’s lawyers will usually write to inform you of the court’s order first before taking possession of the property.

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