# Mailing your keys back to your lender **URL:** \ **Category:** Factual Questions\ **Created:** [April 17, 2009, 4:31pm UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432 "2009-04-17T16:31:23Z")\ **Posts on this page:** 11\ **Page:** 2
**Author:** ![whole\_bean](https://avatars.discourse-cdn.com/v4/letter/w/96bed5/32.png) [@whole\_bean](https://boards.straightdope.com/u/whole_bean)\ **Post date:** [April 17, 2009, 9:06pm UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/21 "2009-04-17T21:06:52Z")
> [@Northern\_Piper](#): > > Perhaps we’re talking at cross-purposes. In our system, a mortgage has at least two key provisions: a personal covenant to pay the amount borrowed, and a statutory lien against the property. (It’s not a common law mortgage with an actual transfer of title to the mortgaged property.) > > To enforce either right, the creditor has to go to court: either to sue on the personal covenant to pay, or to foreclose on the mortgaged property, forcing a judicial sale or possession. The creditor can’t enforce the mortgage lien without foreclosure proceedings in the Queen’s Bench. In fact, they even need permission from the Court just to file the Statement of Claim on the mortgage. > > That’s the point at which the creditor has to choose. If the debtor has significant assets in addition to the mortgaged property, the creditor may decide to sue on the covenant. But if the mortgaged property is the debtor’s main asset, the creditor would likely choose to foreclose. > > Once the Queen’s Bench orders foreclosure, the judgment acts to extinguish the personal covenant to pay the deficiency, so the creditor cannot pursue the debtor personally. BTW, ignorance (of Canadian law) fought. Thanks ---
**Author:** ![Desert\_Nomad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/desert_nomad/32/177_2.png) [@Desert\_Nomad](https://boards.straightdope.com/u/Desert_Nomad)\ **Post date:** [April 18, 2009, 12:52am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/22 "2009-04-18T00:52:00Z")
In Western mortgages as I understand, the borrower is on the hook for the full amount… the risk is all upon the buyer. Over here, Islamic mortgages under Sharia place the risk upon both the borrower and the lender, so if the property drops in value, the bank is out of luck. I think one can get Sharia compliant mortgages in the US now too. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [April 18, 2009, 2:51am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/23 "2009-04-18T02:51:56Z")
TV program a couple days ago said so many foreclosed houses are being trashed by unhappy owners ,that banks are making deals to try and keep them usable. They will deal . Then abandoned homes are being stripped. That is expensive homes in good neighborhoods too. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [April 18, 2009, 9:49am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/24 "2009-04-18T09:49:41Z")
> [@Gfactor](#): > > [QUOTE=whole bean] > > I had thought of the possibilty of other assets, but cannot imagine that happens often - bird in the hand and all. Right. I doubt it’s common. [/QUOTE] Sure, but note that this provision is not limited to residential mortgages. It has its origins in depression legislation to protect farmers, and so it’s framed in terms of mortgages and sale of land, not just residential matters. It also applies in commercial settings, where it may be more common for the debtor to have other assets worth going after. I don’t practise in this area, so I’m not that familiar with the details, but I can say that I’ve seen reported cases from the Saskatchewan courts where the creditor chose to sue on the personal covenant. [QUOTE=whole bean] BTW, ignorance (of Canadian law) fought. Thanks [/QUOTE] You’re welcome, but bear in mind it’s not necessarily the same across Canada, since property and civil rights are a matter of provincial jurisdiction. I think there are similar provisions in the two other Prairie provinces (Alberta and Manitoba), which were similarly hard hit by the Depression, and my recollection is that the civil law in Quebec is similar on this point, via the analysis of hypothèques which have a clause en dation de paiement. (It’s been a while since I’ve studied this area, so I may have the terminology incorrect.) ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [April 18, 2009, 9:51am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/25 "2009-04-18T09:51:59Z")
> [@Desert\_Nomad](#): > > In Western mortgages as I understand, the borrower is on the hook for the full amount.. the risk is all upon the buyer. Over here, Islamic mortgages under Sharia place the risk upon both the borrower and the lender, so if the property drops in value, the bank is out of luck. I think one can get Sharia compliant mortgages in the US now too. As the discussion with **whole bean** illustrates, it’s not possible to generalise about “Western mortgages.” It depends largely on the law of the jurisdiction where the mortgaged property is located. In my jurisdiction, the risk can fall on the creditor as well as on the debtor. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [April 18, 2009, 12:15pm UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/26 "2009-04-18T12:15:09Z")
Here in the US we have the concept of a “no-recourse” loan. Not all states have them, but many do. In that sort of loan, the lender’s only source of value in the event of default is the collateral, period. Assume you have a $300K no-recourse mortgage on a house now worth $100K. Also assume you have $1 million cash in another bank. You can walk on the mortgage, the lender will seize the house & sell it, and they’re out $200K. They have no right whatsoever to come after your $1 million for the $200K they’re short. They can put adverse notes in your credit history, and other lenders probably won’t lend to you for a few years, but you and your $1million are 100% safe. Why? because the mortgage contract you signed with the lender said so. The fact that no-recourse loans or their statutory equivalent were written in large volumes in some of the faster-growing areas of the last 10 years has really fueled the abandoned house problem. If you are significantly underwater on a fairly fresh no-recourse loan, walking away is the only economically rational thing to do. The only problem comes in when thousands of people each do the the rational thing for them individually, which is utterly irrational in its total effect on everybody. ---
**Author:** ![rbroome](https://avatars.discourse-cdn.com/v4/letter/r/838e76/32.png) [@rbroome](https://boards.straightdope.com/u/rbroome)\ **Post date:** [April 18, 2009, 12:40pm UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/27 "2009-04-18T12:40:09Z")
> [@gotpasswords](#): > > Just wanted to add that the popular term for this is “jingle mail.” or back in the 80s when this was happening around here a lot, it was called keying the house. ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [April 18, 2009, 2:55pm UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/28 "2009-04-18T14:55:59Z")
> [@gonzomax](#): > > TV program a couple days ago said so many foreclosed houses are being trashed by unhappy owners ,that banks are making deals to try and keep them usable. They will deal . Then abandoned homes are being stripped. That is expensive homes in good neighborhoods too. That is why some banks are offering a keys for cash. When the home owner is behind and meets with the bank and it is ovious that they are going to default. The some banks are offfering cash a few thousand if the home owner will move out not damaging the house. The bank gets the property in better shape, they do not have to foreclose, and the hit on the home owner credit rating is not as bad (the loan did not go into default. My son called his bank to find out how they wanted to handle his case, he got a divorce, new job 20K less ayear. He was going to default no boubt. The bank gave him 10 days to move out and he had to leave the house clean, no junk. He has a notge on his credit report that he lost the house but it is not a default. His credit is trash anyway because of all his other credit problems. ---
**Author:** ![Earl\_Snake-Hips\_Tucker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/earl_snake-hips_tucker/32/3269_2.png) [@Earl\_Snake-Hips\_Tucker](https://boards.straightdope.com/u/Earl_Snake-Hips_Tucker)\ **Post date:** [April 21, 2009, 12:40am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/29 "2009-04-21T00:40:59Z")
From today’s news: > [@](#): > > [One] day in December, City Councilman Kwame Kenyatta and his wife packed up their belongings, locked the doors, mailed in the keys and walked away. . . . Story doesn’t indicate whether it was literal or metaphorical: [http://www.msnbc.msn.com/id/30311735](http://www.msnbc.msn.com/id/30311735) ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [April 21, 2009, 12:44am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/30 "2009-04-21T00:44:47Z")
> [@Earl\_Snake-Hips\_Tucker](#): > > From today’s news: > > Story doesn’t indicate whether it was literal or metaphorical: > [http://www.msnbc.msn.com/id/30311735](http://www.msnbc.msn.com/id/30311735) They may well have done so. Legally, that accomplishes nothing, and it doesn’t even save the mortgagee money because you can bet they’ll have a locksmith rekey the place as soon as they regain possession. In Michigan, and most other states, the lender would still have to foreclose. Actually, my second sentence isn’t quite true. Mailing the keys would count as evidence of abandonment. The redemption period would be one month instead of six. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [April 21, 2009, 2:09am UTC](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432/31 "2009-04-21T02:09:21Z")
> [@Earl\_Snake-Hips\_Tucker](#): > > Story doesn’t indicate whether it was literal or metaphorical: > [http://www.msnbc.msn.com/id/30311735](http://www.msnbc.msn.com/id/30311735) From that link: > [@](#): > > In Detroit, the median sales price for a home is now a pathetic $5,800, down more than $66,000 from seven years ago. Yipes! [Previous page](https://boards.straightdope.com/t/mailing-your-keys-back-to-your-lender/493432.md?page=1)