A mortgage is security created by the transfer (pledge) or assignment of legal title to real property (real estate) or personal property (chattel) in the form of a real estate mortgage or chattel mortgage, respectively. It is subject to an express or implied condition that requires the mortgagee to transfer title back to the mortgagor when the obligation for which the security was created is discharged.
A real estate mortgage is debt financing used by purchasers or owners of real estate in which a lien attaches real property to secure payment and borrower perform in accordance with the terms and conditions of the mortgage loan agreement. A mortgage provides the mortgage holder a legal mechanism to foreclose on the property if the mortgage borrower defaults on the loan.
A real estate mortgage involves the security evidenced by a mortgage deed and a mortgage note. A mortgage deed is the document that imposes a lien on the title to real property (property deed) as security for a real estate loan, it allowing the mortgage holder (mortgagee) to foreclose on the property if the mortgagor fails to repay the loan or otherwise perform as contractually required in the loan agreement. A mortgage note is a promissory note secured by a real estate mortgage evidencing the obligation of the borrower (mortgagor) to repay its holder (mortgagee) the loan principal plus interest at a specified rate and over the loan’s term.