Discharge and Default
Learn about the initial consequences of payment or nonpayment of the mortgage debt, including prepayment, discharge, default, acceleration, workouts, and the equity of redemption.
In this lesson we’ll learn about discharge and default in mortgages. We’ll discuss what happens if the mortgage debt is paid, and what happens next if it’s not.
As we’ve seen before, the note that underlies the mortgage is usually payable in a series of installments over a fixed term. A mortgagor might choose to pay the note early, which is called prepayment. For example, if the mortgagor sells the property, the mortgagor often will use the sale proceeds to pay off the note. Unless the note...