Mortgages Information
Mortgages are more commonplace now than ever before but most people that have them really don’t fully understand what they are. A common misconception is that a Mortgage is a Home Loan but this is false and people need to be educated about the fact that it is not a loan at all. The terms mortgagee (the financier) and mortgagor (buyer), are part of a legal contract (mortgage) which uses the property as security on the debt. The document is just a simple way to safeguard the lenders interests.
The facility that a mortgage creates means individuals and companies can acquire land or property without needing the full face value to purchase it at the time. Misunderstandings on how the system works also create problems but the main points are dealt with during the rest of this article. It is because the mortgagor is often referred to as the Borrower that has led to the misunderstanding that the finance for the purchase is a loan in the same way the name Lender is used to refer to the mortgagee. The security the mortgagee uses is called a lien which is a legal term that stays in force until all monies are repaid.
This means that the property becomes security against itself and is the protection a mortgagee requires to fulfill his promise of funding. This lien than becomes a matter of public record when it is registered at the county courthouse or equivalent. While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. What this means is that even though the mortgagee has possession of the mortgage he is not the owner of the property nor does he have the title.
The mortgage is a surety for the benefit of the mortgagee, so should the debt remain unpaid then the amount owed can be reclaimed by the sale of the property. This process has many names and in the United States it is referred to as foreclosure but this does need to go through the courts. The reason behind this process is to ensure the legal procedures have been followed and also why it is called Judicial Foreclosure. This is only a short introduction as the subject is much more complex but this information should make this important issue much clearer.