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Mortgage Home Loans Are Not Actual Loans

Jun 26, 2008
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. For instance, they are often referred to as a Mortgage Home Loans but they aren't actually loans in the traditional sense of the word. There are three terms that you need to learn that are used: the first is mortgagor (the property owner), the mortgagee (the company that takes on the security for the property) and the mortgage (the contract to pay between the two). However, it is easier to explain it as a legally binding document where the lender is protected from loss by using the property as security for the debt.

Without mortgages being available, people and many businesses would not be able to afford the full asking price of a property if it was required they pay this amount upfront. Misunderstandings on how the system works also create problems but the main points are dealt with during the rest of this article. Being the financier, the mortgagee is the person who lends funds to the mortgagor or borrower. The property has a lien, which is the legal ownership of the property by the mortgagee until the agreement between the two parties has been fulfilled.

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. Information about the lien is registered at a county courthouse, or similar, to ensure the contract is official and binding. This act makes the purchase and the ownership of the house official and no-one can transfer this ownership until the debt is fully paid off. This is a strange situation where the mortgagor still owns the property even though the debt still remains to be paid.

However if the mortgagor or the owner defaults on his or her payments, the mortgagee has the right to dispose of the property to reclaim funds. Should they need to reclaim these costs then the case will be held in court and the procedure called foreclosure will be started. To ensure that everything is legal and above board, the court will place a ruling on the disposal in a process called judicial foreclosure. For the sake of clarity this is only a brief description of a much more complex subject but it should have helped explain the basic subject.
About the Author
Anthony Dean has helped many home owners with the loan modification process. See how he can help with your loss mitigation here
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