Foreclosure

The Facility That A Mortgage Creates

If you were to be asked to describe and give a definition for the word mortgage, would you be able to, because it is surprising how few people know what they really are. Some people have gotten into the habit of calling them mortgage home loans but that isn’t right at all as they are not loans at all. The mortgage is basically a way of securing a debt to which the property is the security with the mortgagor as the person who will owe money to the mortgagor. More accurately, it is a document that protects your lender’s interest with your property itself and a legal agreement you have provided to a lender.

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. Although this article is brief, below are points that will help more in the understanding of how this system operates.

As it is not a loan, the mortgagor should not be called The Borrower but mortgagor and the company providing the finance should not be called The Lender because they are the mortgagee. The document itself produces a lien on your property which is not cleared until the debt is paid.

The property you are buying does in fact become collateral for the finance that has been sought to pay for it and is the protection a mortgagee needs if he is going to continue financing house purchases. Records of this are normally kept in the public records section of the county courthouse or a similar establishment.

So how this works is that the mortgagor (you) owns the property completely even though the mortgagee has possession of the mortgage but not the title.

This means the only occasion that can arise whereby the mortgagee can legally sell your home is if you stop making payments and it needs to be sold to repay the finance used to purchase it. This is the dreaded process referred to as foreclosure but if the property is used as security, then the foreclosure must go through the court system.

To ensure that everything is legal and above board, the court will place a ruling on the disposal in a process called judicial foreclosure. If you were unsure about the definition before and the subject surrounding it, I trust this information has been of use.

Debt Charge