Many practitioners trace the mortgagor’s right to cure a mortgage default and to receive notice prior to foreclosure to the Fair Foreclosure Act (FFA). In truth, however, these rights, as to single-family residential borrowers, originated under the New Jersey, FannieMae/FreddieMac, Single Family, Uniform Mortgage Instrument long before passage of the FFA—rights that are both misunderstood and universally ignored. Today, virtually all residential mortgages use the FannieMae/FreddieMac mortgage form.
It is the thesis of this article that the covenants contained in the uniform mortgage instrument create contractual rights for borrowers—i.e., the right to cure a mortgage default and to receive notice prior to acceleration—which borrowers may utilize in addition to rights under the FFA and which, in many instances, are better drafted and more equitable to borrowers. By design and purpose, both the FFA and mortgage instrument provide independent rights and obligations for borrowers and lenders. Where the FFA applies, the debtor-mortgagor receives rights afforded by the FFA (and parallel rights under the mortgage). Where the FFA is inapplicable, in whole or in part, the mortgage instrument affords residential borrowers independent contractual rights. Additionally, even where the FFA applies, since rights under the mortgage are independent, borrowers acquire contractual rights by virtue of the corresponding covenants in the mortgage that mimic rights and obligations set forth in the FFA.
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