Opinion ID: 2783518
Heading Depth: 2
Heading Rank: 3

Heading: Senior Foreclosure

Text: [¶19] On October 29, 2010, Peoples United, the holder of the senior mortgage, filed a foreclosure complaint pursuant to section 6321, which states in relevant part: After breach of condition in a mortgage of first priority, the mortgagee or any person claiming under the mortgagee may proceed for the purpose of foreclosure by a civil action against all parties in interest in either the Superior Court or the District Court in the division in which the mortgaged premises or any part of the mortgaged premises is located, regardless of the amount of the mortgage claim. (Emphasis added.) Despite being properly served with process, Bank of America failed to appear in the action and was defaulted. On March 22, 2011, Peoples United was granted a foreclosure judgment pursuant to 14 M.R.S. § 6322 (2014), which states in relevant part: [T]he court shall determine whether there has been a breach of condition in the plaintiff's mortgage, the amount due thereon, including reasonable attorney’s fees and court costs, the order of priority and those amounts, if any, that may be due to other parties that may appear and whether any public utility easements held by a party in interest survive the proceedings. 12 (Emphasis added.) As required by section 6322, the court established amounts and set priorities due. It ordered that the proceeds of the foreclosure sale were to be paid first to Peoples United, then to Maine Revenue Services, and, finally, to the “Defendant or any other party appearing in this action.” Howison, 2014 WL 2472117, at  (quotation marks omitted). Everest was the defendant in the senior foreclosure and Bank of America did not appear in the action. Id. [¶20] “Upon expiration of the period of redemption, if the mortgagor or the mortgagor’s successors, heirs or assigns have not redeemed the mortgage, any remaining rights of the mortgagor to possession terminate.” 14 M.R.S. § 6323; see also 14 M.R.S. § 6205 (2014). Put another way, [w]hen that equity of redemption has been lost by the expiration of the statutory period, nothing remains in the mortgagor except the contingency that exceptional circumstances may exist which will entitle him to equitable relief. His legal title was conveyed when he executed the mortgage and his equitable title disappeared with the expiration of the period of redemption. Duprey v. Eagle Lake Water & Sewer Dist., 615 A.2d 600, 604 (Me. 1992) (quotation marks omitted). [¶21] Starting on March 22, 2011, and ending on approximately June 20, 2011, the ninety-day period of redemption on the senior mortgage ran pursuant to 14 M.R.S. § 6322. Everest did not exercise her right of redemption during this time. Id. Bank of America also did not exercise any right of 13 redemption it might have had despite its default. Howison, 2014 WL 2472117, at . Pursuant to section 6323, when the period of redemption for the senior foreclosure expired, no equity of redemption remained with the property. Therefore, any rights Bank of America had in the property vis-à-vis the junior foreclosure disappeared. [¶22] The remaining interests in the property are governed by the judgment of foreclosure in the senior foreclosure case. See 14 M.R.S. § 6324 (2014) (stating that after the expiration of the period of redemption foreclosure sale proceeds should be disbursed “in accordance with the provisions of the judgment.”); see also Restatement (Third) of Prop.: Mortgages § 7.1 (1997) (“It is a fundamental principle of mortgage law that a valid judicial foreclosure of a senior mortgage terminates not only the owner’s title and equitable redemption rights, but also all other junior interests whose holders were made parties defendant.”).