Mortgage

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

• 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
  • 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

• 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

• Mortgage priority is generally determined by date of recording
• Property tax liens take priority over mortgages

• A mortgage is a lien, not a transfer of title
• Title remains with the borrower until foreclosure