Mortgages and Property Liens

Posted by Tax Liens

Mortgages are more commonplace now than ever before but most people that have them really don’t fully understand what they are. The first thing to put straight is that it is not a loan, although they are normally referred to as a mortgage home loan.

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). In fact, in reality, this isn’t the debt but the security required by the lender to protect their interests for the duration of the term.

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. The following information will give a more rounded understanding of how the whole process operates. The problem arises because so many people refer to the buyer as the Borrower and the financier as The Lender which leads people to believe that the money has been loaned which is not the case. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is repaid.

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. Being a legal contract, the property lien will be lodged within the records at the county or city courthouse (or a similar public office).

The lien stays in force while the debt remains but the property is actually owned by the mortgagor. 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 only right that your mortgage gives to the mortgagee over your property is to sell it to recover funds in the case that you do not pay off your debt. In the unfortunate event that requires the property to be sold or Foreclosed, then the case will need to be presented to the courts for approval. This is a legally recognized process that must take place often referred to as ‘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.

Tags: foreclosure, liens

Under Mortgages+ Property Lien Tags: foreclosure, liens