Mortgage Loan Foundations and Variations

Mortgage definition and secured property lien

A mortgage is a loan secured by real estate. In civil-law jurisdictions it is also called a hypothec loan. The borrower uses the property as collateral to obtain funds either to purchase real estate or to raise money for other purposes. If the borrower defaults or otherwise breaches the loan terms, the lender can enforce the security by taking possession and selling the property through foreclosure or repossession to recover the debt. Legally, the mortgage creates a security interest (a lien/encumbrance) on the mortgaged property. This security typically gives the mortgage lender priority over other creditors: in bankruptcy or insolvency, other creditors are generally paid only after the mortgage lender has been repaid in full from the sale of the secured property. The mortgage process involves mortgage origination and legal completion of the mortgage deed, and it is commonly structured with defined loan terms, interest, and repayment (often amortized over many years).

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Mortgage origination and foreclosure mechanics

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