redemption by the mortgagor or any person entitled to redeem, to such time and on such terms and conditions, as to security, possession of the premises and otherwise, as may be equitable and just, to fix the manner, terms, and order of redemption from the sale, and to permit redemption therefrom by anyone equitably entitled to redeem, although not entitled to redeem under the foregoing provisions of this act. As a condition of extending the period of redemption, a bond approved by the Court shall be required sufficient in amount to pay the costs of the action and all damages arising from such extension.

SEC. 20. RECOVERY OF POSSESSION.-After the expiration of the mortgagor's redemption period, the person holding the right acquired under the sale may recover possession of the premises from the mortgagor or anyone holding under him by an action as from a tenant for the nonpayment of rent, or by any other existing remedy.

SEC. 21. LIMITATION OF ACTION TO QUESTION FORECLOSURE.-No such sale shall be held invalid or set aside unless the action or defense in which its validity is called in question be commenced or interposed before the purchaser has gone into possession of the premises under a duly recorded certificate of sale and has occupied the same for one year and paid the current taxes thereon during such period, or has without possession paid the current taxes thereon under such recorded certificate for three successive years, during which time the premises have not been occupied by the mortgagor. This period of limitation shall not be extended by any disability.

SEC. 22. FORECLOSURE FOR INSTALLMENT.-A foreclosure by power of sale for less than the whole amount owing on a mortgage exhausts the mortgage lien on that part of the premises sold on the foreclosure, but leaves the mortgage and power of sale in force on the remainder of the premises as security for sums not due at the date of the sale.

SEC. 23. POWER OF SALE, AUTHORITY TO INCLUDE, ONE COUPLED WITH AN INTEREST, NOT REVOKED.-(1) Authority given by a will, power of attorney or otherwise, to mortgage real property implies authority to include a power of sale.

(2) A power of sale given in any mortgage shall be deemed a part of the security, and in the absence of any provision to the contrary in the mortgage shall vest in and may be executed as provided in this act by any person who becomes the record owner of the mortgage by assignment or otherwise.

(2) The death, insanity, or other disability of a mortgagor, or any transfer or sale of the premises by him, occurring subsequent to the execution of the mortgage, shall not revoke or suspend a power of sale therein; but in case of such death, insanity, or other disability, the Supreme Court of the District of Columbia, in the exercise of its equity jurisdiction, shall have power to stay the sale of the property mortgaged a reasonable period of time.

SEC. 24. FORMS IN FORECLOSURE.--(1) The following forms of power of attorney to foreclose, notice of foreclosure sale, certificate of foreclosure sale, and certificate of redemption, may be used for power of sale foreclosure and redemption therefrom and may be altered as circumstances require; but the use of other forms is not forbidden or invalidated.

(2) The blank spaces in the forms indicate where appropriate matter is to be supplied to complete the form. The words in parentheses are no part of the forms, but indicate what matter is to be supplied to complete them, or changes or additions that may be made in or to them.

POWER OF ATTORNEY TO FORECLOSE

(3) (Name and address), mortgagee in (or the record owner of, the mortgage executed by day of

trustee in, or assignee of), and ---, mortgagor, dated the

19, and recorded in the office of the recorder of deeds of the does hereby authorize (name and address of

District of Columbia, at

agent) to foreclose said mortgage by power of sale.

In witness whereof this power of attorney is duly executed this day of 19 (or use other testimonium clause. Add signature and other formalities of execution).

(4) A power of attorney in substantially the foregoing form operates as though it also contained express provisions authorizing the agent to take all proceedings to the end of foreclosing the mortgage by power of sale required by law, and to act in and about the foreclosure as fully to all intents and purposes as the principal might or could do if personally present, and ratifying and confirming all that the agent shall lawfully do or cause to be done, by virtue of the power of attorney.

by of

NOTICE OF FORECLOSURE SALE

(5) Default having been made in the conditions of a mortgage executed mortgagor, to mortgagee (or trustee), dated the day 19__, and recorded in the office of the recorder of deeds of the District of Columbia (give date and place of record), which mortgage was duly assigned to by assignment dated and recorded in said office (give date and place of record) (likewise show any further assignments, and the appointment of a personal representative when foreclosure is by him), and being now the record owner of said mortgage.

Notice is hereby given that by virtue of the power of sale therein said mortgage will be foreclosed by a public sale of the following mortgaged premises, to wit: (Describe the premises and also give street address if there be one.) Such sale will be held at (the United States marshal's office or the mortgaged premises) in the District of Columbia on the day of 19--, at o'clock meridian by the United States marshal in and for the District of Columbia to satisfy the amount due on the mortgage at the date of sale and the costs of foreclosure. The amount claimed to be due on said mortgage at the date of the sale, exclusive of costs, is $----

The terms of sale are

Dated

(Name and address)

Attorney for record owner.

(6) I,

Name and address)

Record owner of the mortgage.

CERTIFICATE OF FORECLOSURE SALE

mortgagor, to

as United States marshal of and for the District of Columbia, do hereby certify by virtue of a power of sale contained in a mortgage executed by -, mortgagee (or trustee), dated and recorded in the office of the Recorder of Deeds of the District of Columbia (give date and place of record), and in pursuance of the notice of foreclosure (if desired, the name of newspaper and place and dates of publication of the notice of sale can be included), I did, at the time and place specified in such notice, to wit: (Give time and place) (if the sale was postponed, recite each postponement, giving the time to which postponed, and recite that the sale was made at the last time to which postponed) expose for sale, and did sell at public auction, the following premises described in said mortgage, to wit: (Describe premises) to for the sum of $ (describe terms if sale not all for cash) (if sold in separate parcels, give separate description of each parcel and name of purchaser and amount paid for each parcel) he being the highest bidder, and that being the highest price bidden therefor. (If the premises were offered as separate tracts and no bids or insufficient bids received, and the whole then offered as one tract, this may be recited.) That the sale was openly and lawfully conducted, and that the said premises are subject to redemption at any time within fifteen days from the day of sale, was provided by law. In witness whereof, I have executed this certificate of sale this day of 19-. (Or use other testimonium clause. Add signature of marshal by himself or by a deputy and other formalities of execution.)

CERTIFICATE OF REDEMPTION

(7) I, -, as United States marshal of and for the District of Columbia, do hereby certify that (name and address of person redeeming) has this day paid to me the sum of $- in redemption of the following-described premises (describe premises redeemed) from the sale thereof made on (date of sale) on the foreclosure of a mortgage on said premises executed by mort. gagor, to mortgagee (or trustee), dated and recorded in the office of the recorder of deeds of the District of Columbia (give date and place of record), at which sale said premises were sold to for the sum

of $ — (recite terms, if any), the certificate of which sale was recorded in the office of the Recorder of Deeds of the District of Columbia (give date and place of record).

I further certify that such redemption was made by said upon the claim that he is the owner of the premises above described. (If redemption is by a lienor, state that he redeems upon the claim that he has a lien on the premises, and identify the lien by giving parties, date, and place of record,

or other identifying facts, of the original lien instrument and assignments thereof. Recite the amount claimed to be owing on the lien at the date of redemption, and that the documents evidencing his right to redeem were produced and exhibited to the marshal as required by law.)

In witness whereof I have executed this certificate of redemption this day of 19. (Or use other testimonium clause. Add signature of marshal by himself or by a deputy and other formalities of execution.)

(The above form is for use when redemption is made by payment to the marshal, and fitting changes must be made when the certificate is executed by the owner of the marshal's certificate of sale.)

SEC. 25. COURT FORECLOSURE NOT AFFECTED.-The provisions of sections 2 to 24, both inclusive, of this act relate to foreclosure of mortgages by power of sale, and do not in any way affect foreclosure in court as at present exercised. Foreclosure by power of sale under the provisions of said sections is an optional method of foreclosure, and is in addition to foreclosure by suit, action, or proceedings in court.

SEC. 26. INTEREST OR PAYMENTS COLLECTED ON PRIOR ENCUMBRANCE.-Where any mortgage, or note, contract, or auxiliary instrument connected therewith, shall provide for payment to the mortgagee or trustee of interest or other sums to be applied on or against an indebtedness under a prior or superior mortgage, the owner or holder of the inferior mortgage, or his agent, to whom such payment is made in the first instance, shall credit the mortgagor with interest on such payment from the time it is received until it is paid to the owner or holder of the prior mortgage, at the same rate as the rate on the inferior indebtedness; and failure to give such credit shall make the owner or holder of the inferior mortgage subject to payment of damages in the amount of twenty times the interest withheld, together with costs of the action, and a reasonable attorney's fee to be allowed by the court.

SEC. 27. RELEASES TO ENABLE REFINANCING.-In the event a mortgagor (including a grantor in a deed of trust to secure an indebtedness) shall find it necessary or deem it advisable to refinance any mortgage which is a first or superior lien on the premises mortgaged, and where there are second or other inferior mortgages upon such premises, he may require the owner, holder, or trustee of any such inferior lien or encumbrance to release such mortgage pending the recording of the new mortgage constituting a substitute for the existing first mortgage: Provided, however, That such new mortgage does not exceed the amount of the superior mortgage indebtedness at the time the inferior mortgage was recorded; and the second or other inferior mortgage shall then be reinstated of record by the Recorder of Deeds of the District of Columbia without loss of priority over any other lien, debt, judgment, or claim to which it was superior before such release, and without impairing the validity, security, or priority of any note, bond, or other evidence of indebtedness secured thereby; and it shall be unlawful for the owner, holder, or trustee of such second or other inferior mortgage, or any other person for them, to make any charge against the mortgagor by way of commission, attorney's fee, bonus, or otherwise, for such release and reinstatement in a sum greater than one-half of 1 per centum of the amount of the debt secured thereby. If any greater charge shall be collected or attempted to be collected, the mortgagor shall be entitled to recover damages of five times the excess, together with costs and a reasonable attorney's fee to be allowed by the court. Failure to make release as provided in this section shall entitle the mortgagor to recover double the amount of damages occasioned by such failure, together with costs and a reasonable attorney's fee to be allowed by the court.

SEC. 28. LIBERAL CONSTRUCTION.-Any rule that statutes in derogation of the common law are to be strictly construed shall have no application to this act. SEC. 29. RULES FOR CASES NOT PROVIDED FOR IN THIS ACT.-In any case not provided for in this act the rules of law and equity, including the law merchant, shall govern.

SEC. 30. NOT TO APPLY TO EXISTING MORTGAGES OR AGREEMENTS.—The provisions of this act shall not apply to mortgages made and delivered and/or agreements made and entered into before the act takes effect.

SEC. 31. REPEAL.-Sections 539 and 545 of the Code of Laws of the District of Columbia are hereby repealed except as to mortgages existing at the time the act takes effect, and all acts or parts of acts applying to the District of Columbia inconsistent with the provisions of this act are hereby repealed,

SEC. 32. TIME OF TAKING EFFECT.-This act shall take effect on and after

Senator BLAINE. We will take up the bill relating to foreclosure of mortgages, and I will ask Mr. Brinkman to make a preliminary statement on that the same as he has on the bill relating to realestate operators.

STATEMENT OF 0. B. BRINKMAN, ATTORNEY AT LAW

Mr. BRINKMAN. On June 4, 1929, the Senate adopted its Resolution No. 58, which I will ask to have inserted in the record at this point, with the permission of the subcommittee:

[S. Res. 58, Seventy-first Congress, first session]

Whereas it is alleged that many millions of dollars of real-estate mortgage notes and bonds, secured by trust deed or otherwise, on real estate within the District of Columbia, have been issued, in excess of the value of the properties so mortgaged, and which securities have been sold throughout the United States through alleged questionable means and methods, to innocent purchasers, and that purchasers of homes and other real estate are denied their day in court in default of their payment of principal or interest; and

Whereas the laws for the District of Columbia are either absent or ineffective for the protection of innocent purchasers of such securities and homes and real estate, in the following particulars, namely:

(a) No adequate law relating to the issuance and sale of stocks, bonds and mortgages, and other securities, as affecting real estate or otherwise;

(b) No law inhibiting unethical, unfair, and unscrupulous real-estate and finance operators; and

(c) No law providing for an orderly foreclosure of trust deeds, mortgages, or contracts relating to the purchase and sale of real estate, through court procedure: Therefore be it.

Resolved, That the Committee on the District of Columbia, or a duly authorized subcommittee thereof, is hereby authorized and directed to make a full and complete investigation in respect to the several matters hereinbefore set forth, including the issuance and methods of sale of stocks, bonds, or other securities of a different character than heretofore stated, and other relative or similar matters, and to report to the Senate as soon as practicable the result of its investigations, together with its recommendations, if any, for necessary legis lation. For the purposes of this resolution the committee, or any duty authorized subcommittee thereof, is authorized to hold hearings, to sit and act at such times and places during the sessions and recesses of the Senate in the Seventy-first Congress until the final report is submitted, to employ such clerical and other assistants, to require by subpoena or otherwise the attendance of such witnesses and the production of such books, papers, and documents, to administer such oaths, and to take such testimony and make such expenditures as it deems advisable. The cost of stenographic services to report such hearings shall not be in excess of 25 cents per hundred words. The expenses of the committee, which shall not exceed $2,500, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman.

Mr. BRINKMAN. That resolution contains the statement, in paragraph (C), that there is

No law providing for an orderly foreclosure of trust deeds, mortgages, or contracts relating to the purchase and sale of real estate, through court procedure.

It directs the Committee on the District of Columbia, or a duly authorized subcommittee, to make an investigation with reference to that and other matters touched on in the resolution.

In accordance with the terms of that resolution I was employed by the subcommittee to make an investigation, among other things, of foreclosure procedure within the District of Columbia, and I found that a peculiar condition exists in the District in that there are practically no laws of any consequence relating to foreclosure of mort

gages here. There are, however, a very large number of mortgages foreclosed here every day.

Senator BLAINE. Mr. Brinkman, that must be a misnomer foreclosure, as we generally understand the term. Go ahead.

Mr. BRINKMAN. In fact, they do not use in the District of Columbia the ordinary common law or old form of mortgage. They use a trust deed, and these trust deeds instead of providing for foreclosure, provide a power of sale to the trustee to sell the property under the terms of the trust deed, so it is not a foreclosure in the strict legal sense. However, it amounts to the same thing in the end. The man who owes the money and who is unable to pay the interest or the principal or fails in some other particular loses his equity by reason of the sale of the property.

Senator BLAINE. The sale is really made by reason of the power of attorney that the mortgagor has given to the trustee.

Mr. BRINKMAN. Yes. And in most instances the mortgagor has no practical knowledge of what is in the trust deed that he signs, contained in the printed form that he does not read. He simply signs his name in the presence of the notary. He needs the money and signs anything required in order to get the money.

The result is there is in use in the District of Columbia a very severe form of trust mortgage or trust deed which contains provisions which are very severe on the borrower.

I made a rather detailed investigation not only of the laws of the District of Columbia relating to foreclosures and sales under trust deeds, but of the laws of other States, and I was convinced that the procedure here is more severe and harsh, so far as the borrower is concerned, than in almost any other jurisdiction.

As a matter of fact, there are 39 States out of the 48 States in the country that have a form of foreclosure or of sale under trust deeds that is much more protective of the borrower than the procedure here in the District.

The general result of my investigation was embodied in a complete report made to the subcommittee which, if the subcommittee has no objection, I should like to have included in the record. It is rather lengthy, but I think the information it contains may be of some value.

Senator BLAINE. Yes; I think it ought to be incorporated in the record.

REPORT TO THE SUBCOMMITTEE ON INSURANCE AND BANKS OF THE DISTRICT OF COLUMBIA COMMITTEE, UNITED STATES SENATE, WITH RELATION TO THE MATTERS AND THINGS CONTAINED IN SENATE RESOLUTION 58, SEVENTY-FIRST CONGRESS, FIRST SESSION

SECTION 3, FORECLOSURE OF MORTGAGES, ETC.

Hon. JOHN J. BLAINE,

Chairman Subcommittee on Insurance and Banks,

District of Columbia Committee, United States Senate. DEAR MR. CHAIRMAN: Herewith submitted is the final section of my report on the work assigned to me by you in connection with Senate Resolution 58, Seventy-first Congress, first session, this section of the report dealing with that part of the resolution reading as follows:

"(c) No law providing for an orderly foreclosure of trust deeds, mortgages, or contracts relating to the purchase and sale of real estate, through court procedure."