Mortgage Law

Posted by Nick Niesen on October 29th, 2010

A mortgage involve transfers an interest of the land as security for the loan or any other obligations, and the most popular method for financing the real estate transaction. The mortgager is one among party who transfer interest in lands or the borrower of loan, and the other party is the Mortgagee which is an financial institution , or provider of a loan or interest provided in exchange of security interest

A mortgage would be repaid in instalments which will include principal amount along with the interest that has been borrowed , when the borrower fails to make the payments will result in foreclosure of mortgage. Foreclosure of the mortgage will allow mortgagee to state the full mortgage debt that?s due, should be paid immediately, and this would be accomplished through the acceleration clause of the mortgage, and if the mortgager fails to pay after this declaration foreclosures of the home occurs that will lead to capture of security interest in turn lead to sale of the mortgage home for the remaining mortgage debts.

Foreclosures process will depend on the particular state law, as well as the term of mortgage of that state. The most popular processes are the court proceedings that are Judicial foreclosure or it will grant the power to mortgagee to sell off the property that is the power of sales foreclosure. Many states regulate the acceleration clauses, which will allow the late payments for avoiding the foreclosures.

There are 3 theories that exist concerning who has the legal title for the mortgaged property and under this theories, title theory is to security interest that rest with mortgagee, and most of the states follows lien theory, in this theory legal title remains with mortgagor and unless if there is foreclosures, and finally is Intermediate theory which will apply lien theory, and if there will be any default on mortgage, it will apply title theory.

Mortgagee and the mortgager has the right for transferring their appeal in mortgage, but some states holds that if purchaser of the home subject to mortgage do not openly take over mortgage Mortgagees employs due on encumbrance and due on sale clauses for the prevention of the transferring of the mortgages, and these clauses will allow acceleration that having the interest with principal gets due immediately.

The state statutory and as well as common law governs the laws of the mortgage. Mortgagees are being regulated by the state or Federal Law or any agency that depend on under whose laws they are established or chartered.