Extra-judicial Foreclosure (Act 3135) Judicial foreclosure (Rule 68)

No complaint is filed; Complaint is filed with the courts;

There is a right of redemption. Mortgagor has a right of
redemption for 1 year from registration of the sale;
Mortgagee has to file a separate action to recover any
deficiency;
Buyer at public auction becomes absolute owner only after
finality of an action for consolidation of ownership;
Mortgagee is given a special power of attorney in the
mortgage contract to foreclose the mortgaged property in
case of default.
No right of redemption except when mortgagee is a banking
institution; equity of redemption only (90 to 120 days, and
any time before confirmation of foreclosure sale);
Mortagagee can move for deficiency judgment in the same
action
Buyer at public auction becomes absolute owner only after
confirmation of the sale;
Mortgagee need not be given a special power of attorney.

EQUITY OF REDEMPTION VERSUS RIGHT OF REDEMPTION

Equity of Redemption Right of Redemption
The right of defendant mortgagor to extinguish the A right granted to a debtor mortgagor, to repurchase the
mortgage and retain ownership of the property by paying property within one year even after the confirmation of the
the debt within 90 to 120 days after the entry of judgment sale and even after the registration of the certificate of
or even after the foreclosure sale but prior to confirmation. foreclosure sale.
May be exercised even after the foreclosure sale provided There is no right of redemption in a judicial foreclosure of
it is made before the sale is confirmed by order of the mortgage under Rule 68. This right of redemption exists
court. only in extrajudicial foreclosures where there is always a
right of redemption within one year from the date of
sale (Sec. 3, Act 3135), but interpreted by the Court to mean
one year from the registration of the sale.
May also exist in favor or other encumbrances. If General rule: In judicial foreclosures there is only an equity
subsequent lien holders are not impleaded as parties in the of redemption which can be exercised prior to the
foreclosure suit, the judgment in favor of the foreclosing confirmation of the foreclosure sale. This means that after
mortgagee does not bind the other lien holders. In this the foreclosure sale but before its confirmation, the
case, their equity of redemption remains unforeclosed. A mortgagor may exercise his right of pay the proceeds of the
separate foreclosure proceeding has to be brought against sale and prevent the confirmation of the sale.
them to require them to redeem from the first mortgagee or
from the party acquiring the title to the mortgaged
property.
If not by banks, the mortgagors merely have an equity of Exception: there is a right of redemption if the foreclosure
redemption, which is simply their right, as mortgagor, to is in favor of banks as mortgagees, whether the foreclosure
extinguish the mortgage and retain ownership of the be judicial or extrajudicial. This right of redemption is
property by paying the secured debt prior to the explicitly provided in Sec. 47 of the General Banking Law
confirmation of the foreclosure sale. of 2000. While the law mentions the redemption period to
be one year counted from the date of registration of the
certificate in the Registry of Property