Final answer:
The term for a mortgagor's right to pay off their debt and prevent property sale at foreclosure is known as equity of redemption. Equity is the property's market value minus remaining debt, while collateral can be seized if a loan is not repaid.
Step-by-step explanation:
The right of a mortgagor in default to pay all money owed and prevent the sale of the property at foreclosure is called equity of redemption. This legal principle allows the homeowner to reclaim their property by paying off the full amount of the debt, including any interest and fees, before the foreclosure sale is completed. Equity is defined as the market value of the house minus what is still owed to the bank. For instance, if the value of the house is $200,000, and the homeowner owes $180,000 to the bank, then the homeowner's equity is $20,000. Furthermore, collateral is something valuable, such as property, that a lender has the right to seize and sell if the loan is not repaid. A cosigner is another person who legally pledges to repay a loan if the original borrower does not.