Glossary
Mortgagee in possession
Also called: mortgagee sale
A mortgagee in possession is a lender that has taken control of a mortgaged property after a default, usually so it can sell the property to recover the debt. The lender must follow the mortgage terms and state law.
An example
After a borrower fails to remedy a default, the lender takes possession of the property, appoints an agent and sells it, applying the proceeds to the debt and costs.
Why it matters
A mortgagee sale may not achieve the price a voluntary sale would, and costs are added to the debt. Acting early to sell or refinance usually leaves the borrower with more control.
Points to check
A mortgagee in possession generally has a duty to take reasonable care to sell for market value, though the details depend on state law. If you receive notice that a lender intends to take possession, seek legal advice immediately and contact the lender to discuss options. Financial counselling and hardship processes may help before possession occurs. Keep copies of all notices and correspondence.