Lender rights and remedies: subrogation, possession, sale and the MCOB rules on default

A mortgage gives the lender two sets of rights. It has a personal right to sue the borrower for the debt. It also has proprietary rights over the property, such as taking possession and selling. CeMAP® MRT2 Learning Outcome 5 covers those remedies, how insurers can recover losses through subrogation, and the MCOB rules that control how regulated lenders use their remedies. Statute references below are for England and Wales. Scotland uses different procedures and terms; the ASSC route covers these, including the Mortgage Rights (Scotland) Act 2001.

Key definitions

Term	Meaning
Mortgagor / mortgagee	The borrower who grants the mortgage / the lender who receives it.
Equity of redemption	The borrower's right to recover the property free of the mortgage by repaying the debt.
Possession	The lender takes control of the property, usually after a court order, so that it can sell with vacant possession.
Power of sale	The lender's right to sell the property and repay the debt from the proceeds.
Receiver	A person appointed by the lender to collect income from the property, for example rent on a buy-to-let.
Foreclosure	A court order that ends the borrower's equity of redemption and vests the property in the lender. It is rarely used.
Subrogation	When an insurer pays a loss, it "steps into the shoes" of the insured to recover the money from whoever is liable.