A mortgage is a means of securing a debt with real estate. A long time ago, the mortgage was considered an actual transfer of title, to become void if the debt was paid off. The modern view, held in most states, is that the mortgage is but a lien, giving the holder, in the event of default, the right to sell the property and repay the debt from the proceeds. The person giving the mortgage is the mortgagor, or borrower. In the typical home purchase, that’s the buyer. The buyer needs to borrow to finance the purchase; in exchange for the money with which to pay the seller, the buyer “takes out a mortgage” with, say, a bank. The lender is the mortgagee, the person or institution holding the mortgage, with the right to foreclose on the property if the debt is not timely paid. Although the law of real estate mortgages is different from the set of rules in Article 9 of the Uniform Commercial Code (UCC) that we examined in Secured Transactions and Suretyship , the circumstances are the same, except that the security is real estate rather than personal property (secured transactions) or the promise of another (suretyship).
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