Headrick owned a house and lot in a very desirable residential neighbourhood of a large city. In order to purchase a new luxury motor vehicle, new boat, and pay for a luxury vacation, he arranged for a mortgage on the house and lot for $330,000. The property at the time had an appraised value of $375,000. Once in funds, Headrick left on his vacation. While on vacation, he decided to extend his travels, even though his vacation time had ended. A month later, he returned home, only to find that he had been terminated by his employer. At this point in time he had spent all of his money on the automobile, boat and vacation, and was unable to make payments on the mortgage. Over the next number of months, Headrick searched for employment without success. He ignored letters from the mortgagee demanding payment, and eventually, the mortgagee decided to sell the property under its power of sale. The mortgagee contacted an appraiser and requested an appraisal of the property “at a fire sale price” as it was anxious to get rid of the property. The appraiser gave an appraisal at $300,000, well below the value of the property if it was offered in a normal real estate listing. The mortgagee proceeded with the sale under the power of sale, and quickly sold the property at the appraised value of $300,000. The mortgagee then demanded the difference between the sale price and the amount of the mortgage, which was still at $330,000. Headrick had protested the listing of the property in the power of sale advertisements at such a low price, and had advised the mortgagee that his friend Esson was prepared to purchase the property for $345,000, but his objections had been ignored by the mortgagee, who simply wanted to get rid of the property. He is now angry and upset that the mortgagee is demanding payment of the additional $30,000 from him. Advise Headrick.
