Fair mortgages come from English common law and may lack certain legal formalities. [13] [14] [15] [16] Mortgages can be legal or cheap. In addition, a mortgage can assume one of different legal structures, the availability of which depends on the jurisdiction in which the mortgage is granted. Common law jurisdictions have developed two main forms of mortgage: death mortgage and legal charge mortgage. If mortgage foreclosure is not the only lien on the property, state law determines the priority of real estate interests. For example, Article 9 of the Uniform Commercial Code governs conflicts between mortgages on real estate and liens on furniture (personal property associated with property). Mortgages can be assigned to other parties with the mortgage note. Some jurisdictions consider that the assignment of the debenture involves the assignment of the mortgage, while others argue that it only creates a right to equity. (2) A suitable mortgage arises if the mortgage is not established by a deed (a prerequisite for legal hypothecs).
However, the mortgage contract must be concluded in writing. The theory of privilege is „the idea that a mortgage resembles a lien such that…” „, according to a mortgage, „. The mortgagee acquires only a lien in the property, and retains legal and equitable ownership, unless effective performance takes place. Most U.S. states. have adopted this theory. [19] This theory is sometimes referred to as the „fair theory of mortgages.” [20] According to the theory of privilege. A hypothec is used to place a lien on the mortgaged property in favour of the mortgagee and the title remains with the mortgagee.
Judicial enforcement is necessary in most cases as a remedy for mortgage default in the theory of privilege, and this process has proven to be cumbersome, time-consuming and costly. As a result, in the theory of privilege, lenders most often use non-mortgage instruments to secure loans, usually in the form of trust deeds or, in the State of Georgia, security deeds. Deeds are still used to transfer legal title to land, and the pervasive use of such deeds in lien theory has generally served to undermine the action of mortgages on it. In some jurisdictions, mainly in the United States,[17] mortgages are non-recourse loans: if the funds recovered from the sale of the mortgaged property are insufficient to cover the outstanding debt, the lender cannot resort to the borrower after foreclosure. In other jurisdictions, the borrower remains liable for all remaining debts through a judgment of default. In some jurisdictions, initial mortgages are non-recourse loans, but second and subsequent mortgages are recourse loans. The solution was to merge the modern set of calves and fees for years into a single transaction, embodied in two instruments: (1) absolute transfer (the charter) for a fee or years to the lender; (2) a bond or bond (the defect) that recites the loan and provides that the land will be reinvested in the borrower in case of repayment, but otherwise, the lender retains ownership. If it is repaid on time, the lender will reinvest the property with a deed of retransfer. These were the transfer hypothec (also called the fee mortgage) or, if written, the deed and retransfer mortgage[8] and took the form of feoffment, trade and sale, or rental and release. Since the lender was not necessarily in possession, had rights of action and gave the borrower a right of repayment, the mortgage was sufficient security.
Thus, at first glance, a mortgage is an absolute transfer of a simple estate, but in reality it is conditional and has no effect if certain conditions are met. The debt was absolute and, unlike a royalty, did not depend on its repayment solely on the raising and sale of grain or livestock, or simply on the transfer of crops and livestock raised on the farmed land. Mortgage debt remained in place regardless of whether the country managed to generate sufficient income to repay the debt. Theoretically, a mortgage did not require other measures on the part of the lender, such as accepting grain and livestock for repayment. In a fair mortgage, the lender is secured by taking possession of all original ownership documents of the property and signing a Memorandum of Title Deed (MODTD) by the borrower. This document is an assurance by the borrower that he has deposited the title deeds with the bank at his own request and that he will do so in order to guarantee the financing received from the bank. [ref. needed] Some transactions are therefore recorded as mortgages after equity, which are not recognized by ordinary law.
Fall mortgages were the original form of mortgage and continue to be used in many jurisdictions and in a small minority of states in the United States. Many other common law countries have abolished or minimized the use of mortgages. In England and Wales, for example, under section 23 of the Land Registry Act 2002, this type of mortgage is no longer available for registered interest in land (although it is still available for non-registered interest). A mortgage involves the transfer of a share of land as collateral for a loan or other obligation. This is the most common method of financing real estate transactions. The mortgagee is the party who transfers the share of the land. The mortgagee, usually a financial institution, is the provider of the loan or other interest in exchange for the security.