ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Understanding Mortgages

Updated on September 7, 2009

Mortgage, in law, the purported conveyance of property as security for the payment of a debt. The condition of the instrument is that, if the debt is paid according to the terms of the note, the conveyance is then void. Both real and personal property may be so mortgaged. Usually, in order to indicate the type of property involved, the conveyance of personal property to secure a debt is called a chattel mortgage. Real estate mortgages take the form of a deed. The borrower is called the mortgagor; the lender is called the mortgagee. Mortgages must be in writing, whatever the property secured. In order to protect innocent purchasers of a mortgaged property, mortgages must be recorded within prescribed time limits; in the United States, each of the several states sets this time limit. An unrecorded mortgage is still enforceable against the original mortgagor or any purchaser of the mortgaged property who has knowledge of its existence.

Foreclosure is the legal means by which a mortgagor (one who makes a mortgage to borrow money) loses his right to redeem his property. A mortgage is a form of security for money owed whereby the debtor keeps possession of the property, usually real estate (unless it is a chattel mortgage), but agrees to hold it as security for the debt. If the borrower fails to keep up his payments, the mortgagee (lender of the money) may bring foreclosure proceedings. If the property, sold at auction, fails to bring enough to pay the claim, the mortgagee can hold the borrower responsible for the difference between what the property brought at a sale and the balance due on the mortgage. If the property sells for more than the mortgage amount (plus interest, legal fees, and court costs), the surplus is turned over to the borrower.

Where the amount is due in installments, payment of the installment due, plus interest and costs, prevents sale of the mortgaged premises- if the mortgage does not contain an acceleration clause. That allows the entire mortgage to become due on failure to comply with the mortgage conditions.

Previously the courts regarded a mortgage deed as in fact contemplating a conveyance of title in the event of default. If the terms of the loan were not met, foreclosure action was instituted, with the mortgagee taking possession of the property as settlement of the obligation. Title passed to the mortgagee, with little or no right of redemption on the part of the mortgagor. The recent tendency of the courts, however, has been to treat a mortgage as simply a lien against the pledged property. In the event of default on the loan, the mortgagee may institute foreclosure proceedings which in this case call for the public sale of the property to satisfy the debt. The proceeds are used, first, to pay the court and sale costs, and then the outstanding debt to the mortgagee. Any portion of the proceeds remaining goes to the mortgagor. The mortgagee may bid on the property, but without any special privilege. However, the conveyance theory is still generally applied to chattel mortgages.

More than one mortgage may be placed on a property at a given time. A first mortgage has a superior claim both as to interest income and as to principal. A second mortgage (or junior mortgage) receives nothing from the proceeds of the sale of a mortgaged property until the first mortgage obligation has been completely satisfied. Should the sale of a mortgaged property in foreclosure fail to realize sufficient funds to meet the full amount of debt outstanding, the debt is not extinguished; the unsatisfied portion of the loan remains an obligation of the mortgagor. The mortgagee is a general creditor of the mortgagor, with an unsecured claim against the mortgagor's assets. In many jurisdictions, the mortgagee may obtain a deficiency judgment which is an effective claim against future property holdings of the mortgagor.

Just as a mortgage must be recorded to be fully effective, so a release of mortgage (a "satisfaction piece") should be recorded to provide lasting evidence that the debt has been satisfied.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)