Baltimore HUD Homes Blog

Mortgage News

The most important thing you must realize about a mortgage is that what you believe it to be is actually wrong. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgage is a legal contract between the mortgagor who is buying the property and the mortgagee, the person supplying the finance and security against the property. 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.

Mortgages have in fact changed the face of house buying because they provide the facility for the purchase without the buyer paying the full cost upfront. The way this process works is presented in brief detail during the rest of this article. Being the financier, the mortgagee is the person who lends funds to the mortgagor or borrower. 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. While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. 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.

The only right the mortgagee has over the property now is if payments are missed and the property needs to be sold so the mortgagee can recoup his funds. If in the unfortunate event this happens, the process whereby the funds are reclaimed is called foreclosure. This is done in order for it to be considered legal; this type of foreclosure is referred to as a judicial foreclosure. This is the subject in brief and while there is a great deal more to it, perhaps this will help to clear up any ambiguities you may have previously experienced.