====== Mortgage ======

A **mortgage** is a **voluntary [[lien]]** on real property given as **security for a loan**.

===== Key Characteristics =====
  * Creates a **lien**, not ownership
  * Property is pledged as **[[collateral]]**
  * Borrower is the **mortgagor**
  * Lender is the **mortgagee**
  * Must be **in writing** to be enforceable
  * Debt is evidenced by a **[[promissory note]]**

===== Mortgage vs Deed of Trust (California) =====
  * **Mortgage**
    * Two parties: mortgagor and mortgagee
    * Foreclosure requires a **court action** (judicial foreclosure)

  * **Deed of Trust**
    * Three parties: trustor, beneficiary, trustee
    * Allows **nonjudicial foreclosure**
    * Most common security instrument in California

===== Common Mortgage Types =====
  * **Fixed-Rate Mortgage**
    * Interest rate stays the same
  * **Adjustable-Rate Mortgage (ARM)**
    * Interest rate changes based on an index
  * **Purchase-Money Mortgage**
    * Loan used to buy the property
  * **Wraparound Mortgage**
    * Includes existing loan plus new financing

===== Priority =====
  * Mortgage priority is generally determined by **date of recording**
  * Property tax liens take priority over mortgages

===== Exam Tip =====
  * A mortgage is a **lien**, not a transfer of title
  * Title remains with the borrower until foreclosure