A mortgagee who exercises its right to take possession of the mortgaged property before the property is sold at a foreclosure sale. A mortgagee becomes a mortgagee-in-possession when it takes over control and management of the real property from the mortgagor.

A mortgagee typically takes possession of the real property to preserve the value of the collateral. However, a mortgagee in possession generally assumes the obligations and liabilities of the mortgagor relating to the property. To avoid the potential risk of being a mortgagee-in-possession, most mortgagees prefer to seek the appointment of a receiver during the foreclosure proceedings to:

To determine if a mortgagee is in possession, a court considers the mortgagee's actions in relation to the property, such as: