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From Wikipedia, the
free encyclopedia A mortgage is
the transfer of an interest in property (or the equivalent in law - a
charge) to a lender as a security for a debt - usually a loan of money.
While a mortgage in itself is not a debt, it is the lender's security for a
debt. It is a transfer of an interest in land (or the equivalent) from the
owner to the mortgage lender, on the condition that this interest will be
returned to the owner when the terms of the mortgage have been satisfied or
performed. In other words, the mortgage is a security for the loan that the
lender makes to the borrower.
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This comes from the Old French "dead pledge,"
apparently meaning that the pledge ends (dies) either when the obligation is
fulfilled or the property is taken through foreclosure.[1]
In most jurisdictions mortgages are strongly associated with loans secured
on real estate rather than on other property (such as ships) and in some
jurisdictions only land may be mortgaged. A mortgage is the standard method
by which individuals and businesses can purchase real estate without the
need to pay the full value immediately from their own resources. See
mortgage loan for residential mortgage lending, and commercial mortgage for
lending against commercial property
Mortgage lender
A mortgage lender is an investor that lends money secured by a mortgage on
real estate. In today's world, most lenders sell the loans they write on the
secondary mortgage market. When they sell the mortgage, they earn revenue
called Service Release Premium. Typically, the purpose of the loan is for
the borrower to purchase that same real estate. The borrower, known as the
mortgagor, gives the mortgage to the lender, known as the mortgagee. As the
mortgagee, the lender has the right to sell the property to pay off the loan
if the borrower fails to pay.
The mortgage runs with the land, so even if the borrower transfers the
property to someone else, the mortgagee still has the right to sell it if
the borrower fails to pay off the loan.
So that a buyer cannot unwittingly buy property subject to a mortgage,
mortgages are registered or recorded against the title with a government
office, as a public record. The borrower has the right to have the mortgage
discharged from the title once the debt is paid.
Borrower
A mortgagor is the borrower in a mortgage—they owe the obligation secured by
the mortgage. Generally, the debtor must meet the conditions of the
underlying loan or other obligation and the conditions of the mortgage.
Otherwise, the debtor usually runs the risk of foreclosure of the mortgage
by the creditor to recover the debt. Typically the debtors will be the
individual home-owners, landlords or businesses who are purchasing their
property by way of a loan.
Other participants
Because of the complicated legal exchange, or conveyance, of the property,
one or both of the main participants are likely to require legal
representation. The terminology varies with legal jurisdiction; see lawyer,
solicitor and conveyancer.
Because of the complex nature of many markets the debtor may approach a
mortgage broker or financial adviser to help him or her source an
appropriate creditor, typically by finding the most competitive loan.
The debt is, in civil law jurisdictions, referred to as hypothecation, which
may make use of the services of a hypothecary to assist in the
hypothecation.
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