ASG Law

Tag: Finance Law

  • Unilateral Interest Rate Hikes: When Banks Overstep Their Bounds in Loan Agreements

    Unilateral Interest Rate Hikes in Loan Agreements are Unenforceable

    G.R. No. 240495 & 240513, September 15, 2021

    Imagine taking out a loan, only to find the bank arbitrarily increasing the interest rate without your consent. This scenario, unfortunately, happens more often than it should. The Supreme Court case of Metro Alliance Holdings and Equities Corporation vs. Philippine Veterans Bank tackles this very issue, reminding banks that they can’t unilaterally change the terms of a loan agreement. The case highlights the importance of mutuality in contracts and protects borrowers from unfair lending practices.

    The Principle of Mutuality in Contracts

    At the heart of this case lies a fundamental principle of contract law: mutuality. This means that a contract must bind both parties equally, and its validity or compliance cannot be left to the will of one party. Article 1308 of the Civil Code of the Philippines explicitly states this: “The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.”

    Think of it like a seesaw. If one side can unilaterally change the fulcrum point, the balance is disrupted, and the other side is at a disadvantage. In loan agreements, this translates to banks not being able to arbitrarily increase interest rates without the borrower’s consent. The contract should be a fair agreement, not a tool for one party to exploit the other.

    The Civil Code also addresses the requirement for interest to be stipulated in writing:

    Article 1956. No interest shall be due unless it has been expressly stipulated in writing.

    This reinforces the necessity for clear, written agreement on interest rates to protect borrowers from hidden or unexpected charges.

    Background of the Case

    The story begins with Philippine Veterans Bank (PVB) granting a P550 million loan to Metro Alliance Holdings and Equities Corporation (MAHEC) and Polymax Worldwide Limited. The loan agreement underwent several amendments, but eventually, a dispute arose over the interest rates being charged.

    Here’s a breakdown of the key events:

    • 2004: PVB grants a P550 million loan to MAHEC and Polymax.
    • Later Years: PVB unilaterally increases interest rates without MAHEC and Polymax’s explicit consent.
    • 2009: PVB initiates extrajudicial foreclosure of a real estate mortgage due to alleged unpaid debt.
    • Legal Action: MAHEC, Polymax, and Wellex (who provided the real estate mortgage) file a complaint to nullify the foreclosure and question the interest rates.

    The case then made its way through the courts, with the central question being whether PVB had the right to unilaterally increase the interest rates on the loan.

    The Court’s Decision

    The Supreme Court sided with the borrowers, ruling that PVB’s unilateral increases in interest rates were indeed invalid. The Court emphasized the importance of mutuality in contracts, stating that:

    In order that obligations arising from contracts may have the force of law between the parties, there must be mutuality between the parties based on their essential equality.

    The Court further explained that allowing one party to unilaterally change the terms of a contract turns it into a contract of adhesion, where the weaker party has no real bargaining power.

    However, the Court also clarified that while the unilaterally imposed interest rates were nullified, the borrowers were still obligated to pay interest on the loan. The Court applied the legal interest rate prevailing at the time the agreement was entered into, which was 12% per annum until June 30, 2013, and 6% per annum thereafter, as per BSP Circular 799-13.

    As a result of the improper interest rate imposition, the foreclosure proceedings were also declared null and void. The Court cited previous cases, stating:

    The registration of such foreclosure sale has been held to be invalid and cannot vest title over the mortgaged property.

    The Court ordered the cancellation of the Transfer Certificate of Title issued in PVB’s name and the reconstitution of the original title.

    Practical Implications and Key Lessons

    This case serves as a strong reminder to banks and other lending institutions that they cannot arbitrarily change the terms of a loan agreement. Borrowers have the right to expect that the agreed-upon terms will be honored throughout the life of the loan.

    Key Lessons:

    • Mutuality is Key: Loan agreements must be mutually agreed upon and cannot be unilaterally altered by one party.
    • Transparency Matters: Interest rates and other charges must be clearly stated in writing.
    • Foreclosure Risks: Improperly imposed interest rates can invalidate foreclosure proceedings.

    Hypothetical Example: Imagine a small business owner taking out a loan to expand their operations. The bank includes a clause in the agreement allowing them to increase the interest rate if market conditions change. If the bank later increases the rate significantly, making it difficult for the business to repay the loan, this case suggests the business owner could challenge the increase in court based on the principle of mutuality.

    Frequently Asked Questions (FAQs)

    Q: What happens if a loan agreement allows the bank to unilaterally change interest rates?

    A: Such a clause is likely unenforceable, as it violates the principle of mutuality in contracts. The borrower can challenge the increase in court.

    Q: What interest rate applies if the agreed-upon rate is deemed invalid?

    A: The legal interest rate prevailing at the time the agreement was entered into will apply.

    Q: Can a bank foreclose on a property if the borrower fails to pay due to improperly imposed interest rates?

    A: No, the foreclosure proceedings can be declared null and void if the interest rates were improperly imposed.

    Q: What should I do if I believe my bank is charging me excessive or unilaterally increased interest rates?

    A: Consult with a lawyer to review your loan agreement and assess your legal options.

    Q: Does this ruling apply to all types of loans?

    A: Yes, the principle of mutuality applies to all types of contracts, including loan agreements.

    Q: What is the effect of BSP Circular 799?

    A: BSP Circular 799 reduced the legal rate of interest from 12% to 6% per annum, effective July 1, 2013. This rate applies in the absence of a stipulated interest rate, or when the stipulated rate is deemed invalid.

    ASG Law specializes in banking and finance law. Contact us or email hello@asglawpartners.com to schedule a consultation.

  • Central Bank Circulars: Understanding Repeal and Saving Clauses in Philippine Law

    The Validity of Saving Clauses in Repealed Central Bank Circulars

    TLDR: This case affirms the validity of saving clauses in Central Bank circulars, even when the circulars themselves are repealed. It clarifies that the Monetary Board has the authority to include these clauses to ensure ongoing legal proceedings for violations of the original circulars are not affected by the repeal. This is crucial for maintaining the stability of the Philippine monetary system and preventing offenders from escaping justice due to technicalities.

    IMELDA MARCOS, PETITIONER, VS., THE HONORABLE COURT OF APPEALS; HONORABLE JUDGE GUILLERMO L. LOJA, SR., THE PRESIDING JUDGE OF BRANCH 26 OF THE RTC AT MANILA; AND THE PEOPLE OF THE PHILIPPINES, RESPONDENTS. G.R. No. 126594, September 05, 1997

    Introduction

    Imagine a scenario where a new law is passed, seemingly wiping away all past transgressions. What happens to those already facing charges under the old law? This is the essence of the legal question addressed in Imelda Marcos vs. Court of Appeals. The case revolves around Central Bank (CB) circulars and whether the repeal of one circular automatically dismisses pending cases filed under it.

    The case involves Imelda Marcos, who was charged with violating Central Bank Circular No. 960 for allegedly opening and maintaining foreign exchange accounts abroad without proper authorization. When CB Circular No. 960 was later repealed by CB Circulars Nos. 1318 and 1353, Marcos argued that the charges against her should be dropped. However, these later circulars contained “saving clauses,” explicitly stating that pending actions or investigations under the old circular would not be affected. The Supreme Court ultimately sided with the government, upholding the validity of these saving clauses.

    Legal Context: Central Bank Circulars and the Power of the Monetary Board

    Central Bank circulars are regulatory issuances of the Bangko Sentral ng Pilipinas (BSP), formerly the Central Bank of the Philippines, designed to govern various aspects of the country’s financial system. These circulars have the force and effect of law, provided they are within the scope of the authority delegated by Congress to the BSP.

    At the heart of this case lies the power of the Monetary Board, the governing body of the BSP, to issue and amend these circulars. Section 14 of the Central Bank Act grants the Monetary Board the power to “prepare and issue rules and regulations necessary for the effective discharge of the responsibilities and exercise of the powers assigned to the Monetary Board and to the Central Bank under this Act.”

    The key legal principle at play here is the concept of repeal and its effect on pending cases. When a law is repealed, it is generally understood that it is no longer in effect. However, the repealing law can include a saving clause to preserve the effect of the repealed law for specific situations, such as pending cases. This is to prevent a situation where wrongdoers escape liability simply because the law under which they were charged has been repealed.

    The relevant provisions in this case are the saving clauses found in CB Circular No. 1318 and CB Circular No. 1353. The saving clause in CB Circular No. 1318 states:

    “SEC. 111. Repealing Clause. All existing provisions of Circulars 363, 960 and 1028, including amendments thereto, with the exception of the second paragraph of Section 68 of Circular 1028, as well as all other existing Central Bank rules and regulations or parts thereof, which are inconsistent with or contrary to the provisions of this Circular, are hereby repealed or modified accordingly: Provided, however, that regulations, violations of which are the subject of pending actions or investigations, shall not be considered repealed insofar as such pending actions or investigations are concerned, it being understood that as to such pending actions or investigations, the regulations existing at the time the cause of action accrued shall govern.”

    Case Breakdown: The Saga of Imelda Marcos and Central Bank Regulations

    The narrative unfolds with Imelda Marcos facing charges for allegedly violating Section 4 of CB Circular 960 by opening and maintaining foreign exchange accounts abroad without prior authorization. These accounts were allegedly held in Swiss banks under the names of various foundations.

    The timeline of events is crucial:

    • 1968-1991: Alleged violations of CB Circular No. 960 by Imelda Marcos.
    • December 20, 1991: Criminal charges filed against Marcos for violating Section 4 of CB Circular 960.
    • 1992: CB Circulars Nos. 1318 and 1353 are issued, repealing CB Circular No. 960 but including saving clauses.
    • May 23, 1994: Marcos files a Motion to Quash, arguing that the repeal of CB Circular No. 960 extinguished her liability.
    • June 9, 1994: The trial court denies Marcos’ Motion to Quash.
    • August 30, 1994: The trial court denies Marcos’ Motion for Reconsideration.
    • Court of Appeals: Marcos petitions the Court of Appeals, which upholds the trial court’s decision.
    • Supreme Court: Marcos elevates the case to the Supreme Court.

    The Supreme Court, in its resolution, emphasized the validity of the saving clauses. The Court quoted the trial judge’s observation:

    “x x x In no uncertain terms, the corresponding informations clearly state that the accused, in conspiracy with the late president x x x opened and maintained foreign accounts abroad in the name of foundations organized by their dummies… As already stated and discussed, it is the accused who (was alleged to have) maintained foreign accounts and earned foreign exchange abroad camouflaged in the name of foreign agents and/or foundations but neither obtained authority to do so nor reported the earnings to the Central Bank.”

    The Court also highlighted the purpose of the saving clauses, stating that they were “dictated by the need to continue the prosecution of those who had already committed acts of monetary destabilization.” To allow the repeal to automatically dismiss pending cases would be an “absurdity.”

    Practical Implications: Protecting the Integrity of Monetary Regulations

    This case has significant implications for the enforcement of monetary regulations in the Philippines. It affirms that the BSP has the power to issue circulars with the force of law, and that these circulars can include saving clauses to protect ongoing legal proceedings.

    For businesses and individuals, this means that they cannot assume that a change in regulations will automatically absolve them of past violations. They must remain aware of their obligations under the law and ensure compliance, even if the specific regulations are later amended or repealed.

    Key Lessons

    • Saving Clauses are Valid: Repealing a law doesn’t automatically dismiss pending cases if a saving clause exists.
    • Monetary Board Authority: The BSP’s Monetary Board has broad powers to regulate the financial system.
    • Compliance is Key: Businesses and individuals must comply with all applicable regulations, even if they are later amended or repealed.

    Frequently Asked Questions (FAQ)

    Q: What is a Central Bank Circular?

    A: A Central Bank Circular is a regulatory issuance of the Bangko Sentral ng Pilipinas (BSP) that governs various aspects of the Philippine financial system.

    Q: What is a saving clause in a law?

    A: A saving clause is a provision in a repealing law that preserves the effect of the repealed law for specific situations, such as pending cases.

    Q: Why are saving clauses important?

    A: Saving clauses prevent wrongdoers from escaping liability simply because the law under which they were charged has been repealed.

    Q: Does the repeal of a law automatically dismiss pending cases filed under that law?

    A: No, not if the repealing law contains a saving clause that preserves the effect of the repealed law for pending cases.

    Q: What is the role of the Monetary Board in issuing Central Bank Circulars?

    A: The Monetary Board is the governing body of the BSP and has the power to issue rules and regulations necessary for the effective discharge of the BSP’s responsibilities.

    Q: What happens if I violate a Central Bank Circular?

    A: Violating a Central Bank Circular can result in criminal penalties, including fines and imprisonment.

    Q: How can I ensure compliance with Central Bank Circulars?

    A: Stay informed about the latest regulations issued by the BSP and seek legal advice if you have any questions or concerns.

    ASG Law specializes in banking and finance law. Contact us or email hello@asglawpartners.com to schedule a consultation.

  • Usury Law & Interest Rates: When Can Courts Intervene?

    When Can Courts Override Stipulated Interest Rates?

    G.R. No. 113926, October 23, 1996

    Imagine you’ve taken out a loan, and the interest rate seems incredibly high. Is there anything you can do? Can a court step in and change the terms of your agreement? This case explores the limits of judicial intervention when it comes to interest rates agreed upon in loan contracts.

    In Security Bank and Trust Company v. Regional Trial Court of Makati, the Supreme Court addressed whether a stipulated interest rate, even if significantly higher than the typical rate, should always prevail over a court’s discretion to impose a lower rate. The case dives into the interplay between the Usury Law, Central Bank Circular No. 905, and the freedom of contract.

    Understanding the Legal Landscape of Interest Rates

    The legal framework surrounding interest rates in the Philippines has evolved over time. Initially, the Usury Law set ceilings on interest rates to protect borrowers from predatory lending practices. However, this changed with the issuance of Central Bank (CB) Circular No. 905, which removed these ceilings, allowing parties to agree freely on interest rates.

    CB Circular No. 905, issued pursuant to Presidential Decree No. 1684, effectively suspended the Usury Law. This meant that lenders and borrowers had more freedom to negotiate interest rates based on market conditions and risk assessments. However, Section 2 of the same circular states that in the absence of an express agreement, the interest rate for loans or forbearances shall remain at 12% per annum.

    Article 1306 of the New Civil Code also plays a crucial role. It states that contracting parties can establish stipulations, clauses, terms, and conditions as they deem convenient, as long as they are not contrary to law, morals, good customs, public order, or public policy.

    For example, consider a small business owner seeking a loan. Before CB Circular No. 905, the interest rate would be capped by the Usury Law. After the circular, the lender could offer a higher rate, reflecting the perceived risk of lending to a small business. The business owner, in turn, could negotiate or seek alternative financing if the rate was too high.

    The Case: Security Bank vs. Eusebio

    The case revolves around Magtanggol Eusebio, who executed three promissory notes in favor of Security Bank and Trust Company (SBTC) in 1983. These notes stipulated an interest rate of 23% per annum. Leila Ventura signed as a co-maker on all three notes.

    When Eusebio failed to pay the remaining balances upon maturity, SBTC filed a collection case. The trial court ruled in favor of SBTC but lowered the interest rate from 23% to 12% per annum. SBTC filed a motion for partial reconsideration, arguing that the agreed-upon interest rate should be honored and that Ventura should be held jointly and severally liable.

    The trial court denied the motion, leading SBTC to elevate the case to the Supreme Court. The central issue was whether the 23% interest rate agreed upon was allowable, considering the Usury Law and CB Circular No. 905.

    Here’s a breakdown of the procedural steps:

    • Eusebio executed three promissory notes with SBTC.
    • Eusebio defaulted on the notes.
    • SBTC filed a collection case in the Regional Trial Court (RTC).
    • The RTC ruled in favor of SBTC but lowered the interest rate to 12%.
    • SBTC filed a motion for partial reconsideration, which was denied.
    • SBTC appealed to the Supreme Court.

    The Supreme Court emphasized the importance of adhering to the clear language of the law. As the Court stated:

    “We cannot see any room for interpretation or construction in the clear and unambiguous language of the above-quoted provision of law. This Court had steadfastly adhered to the doctrine that its first and fundamental duty is the application of the law according to its express terms, interpretation being called for only when such literal application is impossible.”

    Ultimately, the Supreme Court ruled that the 23% interest rate should be upheld. The Court noted that CB Circular No. 905 had suspended the effectivity of the Usury Law, allowing parties to freely stipulate interest rates. Furthermore, the Court emphasized that contracts are binding between parties, and courts should not interfere with valid stipulations.

    As the Supreme Court stated in its decision:

    “In a loan or forbearance of money, the interest due should be that stipulated in writing, and in the absence thereof, the rate shall be 12% per annum.”

    The Court found no valid reason for the lower court to impose a 12% rate of interest when a valid stipulation existed. The decision highlighted the principle of freedom of contract, allowing parties to agree on terms they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

    Practical Takeaways for Borrowers and Lenders

    This case underscores the importance of carefully reviewing and understanding the terms of loan agreements, especially the stipulated interest rates. While CB Circular No. 905 allows for greater flexibility in setting interest rates, it also places a greater responsibility on borrowers to negotiate favorable terms.

    For lenders, the case affirms their right to charge interest rates that reflect the risk and cost of lending. However, lenders should also be mindful of ethical considerations and avoid imposing excessively high rates that could be deemed unconscionable.

    Key Lessons:

    • Freedom of Contract: Parties are generally free to agree on interest rates.
    • Usury Law Suspension: CB Circular No. 905 suspended the Usury Law’s interest rate ceilings.
    • Judicial Intervention: Courts should not interfere with valid contractual stipulations unless they violate the law, morals, or public policy.
    • Due Diligence: Borrowers must carefully review and understand loan terms.

    Imagine a scenario where a person borrows money to start a small business. The lender charges a high interest rate because the business is new and considered risky. According to this ruling, if the borrower agreed to that rate, the court will likely uphold it, emphasizing the importance of understanding and negotiating loan terms beforehand.

    Frequently Asked Questions (FAQs)

    Q: What is the Usury Law?

    A: The Usury Law set ceilings on interest rates for loans. However, its effectivity has been suspended by Central Bank Circular No. 905.

    Q: What is Central Bank Circular No. 905?

    A: CB Circular No. 905 removed the interest rate ceilings imposed by the Usury Law, allowing parties to agree freely on interest rates.

    Q: Can a court change the interest rate in a loan agreement?

    A: Generally, no. Courts should not interfere with valid contractual stipulations unless they violate the law, morals, or public policy.

    Q: What happens if there is no agreement on the interest rate?

    A: In the absence of an express agreement, the interest rate for loans or forbearances shall be 12% per annum.

    Q: What should I do before signing a loan agreement?

    A: Carefully review and understand all the terms, including the interest rate, payment schedule, and any other charges. Negotiate for more favorable terms if necessary.

    Q: Is there any recourse if I feel the interest rate is too high?

    A: While the Usury Law is suspended, you may argue that the interest rate is unconscionable or violates public policy. However, the burden of proof lies with you.

    Q: Does this ruling mean lenders can charge any interest rate they want?

    A: While lenders have more freedom, interest rates should still be fair and reasonable. Courts may intervene if rates are deemed excessive or unconscionable.

    ASG Law specializes in banking and finance law. Contact us or email hello@asglawpartners.com to schedule a consultation.

  • Replevin Actions in the Philippines: Protecting the Rights of Chattel Mortgagees

    Understanding Replevin: Protecting Mortgagee Rights in the Philippines

    BA FINANCE CORPORATION, PETITIONER VS. HON. COURT OF APPEALS AND ROBERTO M. REYES, RESPONDENTS. G.R. No. 102998, July 05, 1996

    Imagine a scenario: a finance company provides a loan for a car, secured by a chattel mortgage. The borrower defaults, and the car ends up in the hands of someone else. Can the finance company simply seize the car from this third party? This is where the legal remedy of replevin comes into play. This case clarifies the rights of mortgagees in pursuing replevin actions to recover mortgaged property from third-party possessors, emphasizing the importance of establishing a clear right to possession and the potential need to implead the original debtor.

    What is Replevin?

    Replevin is a legal action used to recover possession of personal property that is wrongfully detained. It’s a powerful tool for those who have a right to possess specific items, allowing them to reclaim their property through court intervention. In the context of chattel mortgages, it allows the mortgagee (like a finance company) to recover the mortgaged property if the mortgagor (borrower) defaults on their loan.

    Legal Framework for Replevin

    The legal basis for replevin in the Philippines is found in Rule 60 of the Rules of Court. This rule outlines the procedure for obtaining a writ of replevin, which allows the plaintiff to take possession of the property pending the outcome of the case. Key provisions include:

    • The plaintiff must show that they are the owner of the property or entitled to its possession.
    • A bond must be posted to ensure the defendant is protected if the plaintiff’s claim is ultimately unsuccessful.

    Article 559 of the Civil Code also plays a crucial role, stating that “the possession of movable property acquired in good faith is equivalent to a title.” This highlights the importance of determining whether the person in possession acquired the property legitimately. However, this is counteracted by the right of one unlawfully deprived of a movable to recover it from whoever possesses it.

    For example, if a person buys a car without knowing it’s subject to a chattel mortgage, they may be considered a possessor in good faith. However, the mortgagee still has the right to recover the vehicle through replevin if the mortgagor defaulted on the loan.

    The BA Finance vs. Court of Appeals Case: A Detailed Look

    Here’s a breakdown of the key events in the BA Finance case:

    • The Manahan spouses took out a loan from Carmasters, Inc., secured by a chattel mortgage on their Ford Cortina.
    • Carmasters assigned the loan and mortgage to BA Finance Corporation.
    • The Manahans defaulted on the loan, leading BA Finance to file a replevin action.
    • The vehicle was seized from Roberto Reyes, a third party, who claimed to be a good-faith possessor.
    • The trial court initially dismissed the case due to issues with serving summons on the Manahans and concerns about BA Finance’s diligence.
    • The Court of Appeals affirmed the trial court’s decision, emphasizing Reyes’ right as a possessor in good faith.

    The Supreme Court, in its decision, clarified several important points. The Court emphasized that:

    “Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite.“

    The Court further stated, “Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the action need only be maintained against him who so possesses the property.”

    However, the Court also acknowledged that if the right to possession is disputed or if there’s an adverse claim of ownership, it may be necessary to implead other parties, such as the original mortgagor. The Court ultimately affirmed the Court of Appeals’ decision, highlighting the importance of establishing a clear right to possession and considering the rights of third-party possessors.

    Practical Implications for Mortgagees and Possessors

    This case provides valuable guidance for finance companies and individuals dealing with chattel mortgages and replevin actions. Here’s what you need to know:

    • Mortgagees have the right to pursue replevin actions to recover mortgaged property upon default.
    • The possessor of the property is the proper defendant in a replevin action.
    • If the possessor is a third party, the mortgagee must prove the validity of the chattel mortgage and the mortgagor’s default.
    • The rights of good-faith possessors must be respected.

    Key Lessons:

    • For Mortgagees: Ensure your chattel mortgage is properly documented and registered. Conduct due diligence to verify the borrower’s ownership of the property. Act promptly upon default to protect your rights.
    • For Possessors: If you acquire property subject to a chattel mortgage, be aware of the potential for a replevin action. Investigate the property’s history and any existing liens.

    Frequently Asked Questions (FAQs)

    Q: What is a chattel mortgage?

    A: A chattel mortgage is a security interest created over movable property (chattels) to secure the payment of a debt. It gives the lender (mortgagee) the right to seize and sell the property if the borrower (mortgagor) defaults.

    Q: What is replevin?

    A: Replevin is a legal action to recover possession of personal property that is wrongfully detained.

    Q: What happens if I buy a car that is subject to a chattel mortgage without knowing it?

    A: You may be considered a good-faith possessor, but the mortgagee still has the right to recover the vehicle through replevin if the mortgagor defaulted on the loan.

    Q: What should I do if someone files a replevin action against me?

    A: Immediately consult with a lawyer to understand your rights and options. You may be able to challenge the validity of the chattel mortgage or assert your rights as a good-faith possessor.

    Q: Can I be held liable for the mortgagor’s debt if I’m just in possession of the mortgaged property?

    A: Generally, no. The replevin action is primarily about recovering the property, not collecting the debt from you personally.

    Q: What is the difference between replevin and foreclosure?

    A: Replevin is the action to recover the property, while foreclosure is the process of selling the property to satisfy the debt secured by the chattel mortgage. Replevin is often a necessary step before foreclosure can occur.

    Q: What happens to the money from the sale of the foreclosed property?

    A: The proceeds from the sale are used to pay off the outstanding debt, including interest and expenses. Any remaining balance is returned to the mortgagor.

    ASG Law specializes in banking and finance law, including chattel mortgages and replevin actions. Contact us or email hello@asglawpartners.com to schedule a consultation.