A mortgage is a security interest in real estate that a lender holds for the debt of an individual or a business. The debt or loan, which is initially in the form of money, comes with an interest bonded with the purchased property. Thus, the ownership of the property is placed at stake when the debtor fails to pay the loan. In other words, a mortgage is not a loan but a security interest on a loan and therefore should not be mistaken as such.
The lender (typically a bank), or "mortgagee", lends money to a borrower, known as mortgagor, as payment to a property. It obtains a mortgage on the property to protect its interest from the impact of default. Since the amount involved is high, the lender is at risk of losing capital and thus needs protection for its interest. Following national and state law concerning mortgage, there are two ways a lender's business interest can be protected.
In the traditional mortgage scheme, the lender remains the owner of the mortgage property until all legal obligations, aside from repayment of the loan capital and interest, are fulfilled. This scheme, known as mortgage by demise, was widely observed until a more lenient policy beneficial to both the mortgagee and the mortgagor is implemented. The process of fulfilling the legal obligations is called "redemption" because of the principle's resemblance to that of redeeming a hostage through ransom. Until the loan is paid in full, the title of the property will not be transferred to the mortgagor.
In many jurisdictions around the world, mortgage by demise is still actively practiced as opposed to some states, like Georgia, that have already minimized or has completely eliminated this kind of practice for a more feasible result. The Georgia mortgage, in the new scheme, has the right over the property and is even recognized as owner as long as the loan is being faithfully paid off.
Most of today's mortgagees are protected by the Law through mortgage by legal charge. In this scheme, the mortgagor remains the legal owner of the property throughout the life of the loan. However, the mortgagee obtains the right, by way of the Georgia mortgage, to take possession of the property in case the mortgagor breached the contract by failing to pay.
Although the ownership is publicly registered under the mortgagor's name, the agreement is enclosed with the registry to protect the Georgia mortgage (security interest) of the mortgagee. This is beneficial to both parties in that the mortgagor has a full right to make changes in the property for throughout the life of the loan.
The lender (typically a bank), or "mortgagee", lends money to a borrower, known as mortgagor, as payment to a property. It obtains a mortgage on the property to protect its interest from the impact of default. Since the amount involved is high, the lender is at risk of losing capital and thus needs protection for its interest. Following national and state law concerning mortgage, there are two ways a lender's business interest can be protected.
In the traditional mortgage scheme, the lender remains the owner of the mortgage property until all legal obligations, aside from repayment of the loan capital and interest, are fulfilled. This scheme, known as mortgage by demise, was widely observed until a more lenient policy beneficial to both the mortgagee and the mortgagor is implemented. The process of fulfilling the legal obligations is called "redemption" because of the principle's resemblance to that of redeeming a hostage through ransom. Until the loan is paid in full, the title of the property will not be transferred to the mortgagor.
In many jurisdictions around the world, mortgage by demise is still actively practiced as opposed to some states, like Georgia, that have already minimized or has completely eliminated this kind of practice for a more feasible result. The Georgia mortgage, in the new scheme, has the right over the property and is even recognized as owner as long as the loan is being faithfully paid off.
Most of today's mortgagees are protected by the Law through mortgage by legal charge. In this scheme, the mortgagor remains the legal owner of the property throughout the life of the loan. However, the mortgagee obtains the right, by way of the Georgia mortgage, to take possession of the property in case the mortgagor breached the contract by failing to pay.
Although the ownership is publicly registered under the mortgagor's name, the agreement is enclosed with the registry to protect the Georgia mortgage (security interest) of the mortgagee. This is beneficial to both parties in that the mortgagor has a full right to make changes in the property for throughout the life of the loan.
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