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mortgage

 
Dictionary: mort·gage   (môr'gĭj) pronunciation
 
n.
  1. A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.
  2. A contract or deed specifying the terms of a mortgage.
  3. The claim of a mortgagee upon mortgaged property.
tr.v., -gaged, -gag·ing, -gag·es.
  1. To pledge or convey (property) by means of a mortgage.
  2. To make subject to a claim or risk; pledge against a doubtful outcome: mortgaged their political careers by taking an unpopular stand.

[Middle English morgage, from Old French : mort, dead (from Vulgar Latin *mortus, from Latin mortuus, past participle of morī, to die) + gage, pledge (of Germanic origin).]

WORD HISTORY   The great jurist Sir Edward Coke, who lived from 1552 to 1634, has explained why the term mortgage comes from the Old French words mort, “dead,” and gage, “pledge.” It seemed to him that it had to do with the doubtfulness of whether or not the mortgagor will pay the debt. If the mortgagor does not, then the land pledged to the mortgagee as security for the debt “is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the [mortgagee].” This etymology, as understood by 17th-century attorneys, of the Old French term morgage, which we adopted, may well be correct. The term has been in English much longer than the 17th century, being first recorded in Middle English with the form morgage and the figurative sense “pledge” in a work written before 1393.


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A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.

Mortgages are also known as liens against property, or claims on property.

Investopedia Says:
In a residential mortgage, a homebuyer pledges his or her house to the bank. The bank has a claim on the house should the homebuyer default on paying his or her mortgage. In the case of a foreclosure, the bank may evict the home's tenants and sell the house, using the income from the sale to clear the mortgage debt.

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Banking Dictionary: Mortgage
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Debt instrument giving conditional ownership of an asset, secured by the asset being financed. The borrower gives the lender a mortgage in exchange for the right to use the property while the mortgage is in effect, and agrees to make regular payments of principal and interest. The mortgage lien is the lender's security interest and is recorded in title documents in public land records. The lien is removed when the debt is paid in full. A mortgage normally involves real estate and is a long-term debt, normally 25 to 30 years, but can be written for much shorter periods.

Originally written exclusively as fixed-rate fully amortizing loans, mortgages have evolved into more flexible contracts. Since the mid-1970s, the financial industry's funding sources have become more volatile and market sensitive, and legislation and regulation have relaxed the prohibitions on alternative types of mortgage financing, such as variable rate and adjustable rate mortgages. Recent innovations in packaging of mortgage loans for resale in the Secondary Mortgage Market to investors have helped to create a national market for mortgage lending and a wide variety of synthetic financial instruments, such as theCollateralized Mortgage Obligation a multiclass security consisting of several different mortgage backed bonds that have payment characteristics quite different from the mortgages securing the bonds.

See also Adjustable Rate Mortgage; Alternative Mortgage Instrument; Balloon Mortgage; Biweekly Mortgage; Chattel Mortgage; Conventional Mortgage; Derivative Mortgage-Backed Securities; Graduated Payment Mortgage; Growing Equity Mortgage; Interest-Only (IO) Securities; Inverse Floater; Mortgage-Backed Bond; Mortgage-Backed Certificate; Mortgage-Backed Securities; Negative Amortization; Portable Mortgage; Price Level Adjusted Mortgage; Principal-Only (Po) Strip; Reverse Mortgage; Rollover Mortgage; Shared Appreciation Mortgage; Zero Coupon Mortgage.

 

A written Instrument that creates a Lien upon Real Estate as Security for the payment of a specified debt.
Example: Lowry wants to buy a home. She needs a loan to complete the purchase. As Collateral Lowry offers a mortgage on the property to the lender.

Note that the borrower gives the mortgage, which pledges the property as collateral. The lender gives the loan.

 
Thesaurus: mortgage
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verb

    To give or deposit as a pawn: hypothecate, pawn1, pledge. Slang hock. See transactions.

 
Dental Dictionary: mortgage
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n

A right given to the creditor over the property of the debtor for the security of the debt; invests the creditor with the power to have the property seized and sold in default of payment.

 

In Anglo-American law, the method by which a debtor (mortgagor) conveys an interest in property to a creditor (mortgagee) as security for the payment of a money debt. The modern mortgage has its roots in medieval Europe. Originally, the mortgagor gave the mortgagee ownership of the land on the condition that the mortgagee would return it once the mortgagor's debt was paid off. Over time, it became the practice to let the mortgagor remain in possession of the land; it then became the mortgagor's right to remain in possession of the land so long as there was no default on the debt.

For more information on mortgage, visit Britannica.com.

 
Architecture: mortgage
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A loan in which property is used as security for the debt.


 
Columbia Encyclopedia: mortgage
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mortgage, in law, device for protecting a creditor by giving him an interest in property of his debtor. In common law a mortgage was a conditional sale; i.e., the mortgagor (debtor) sold realty (real property mortgage) or personal property (chattel mortgage), but if the debtor paid the debt by a certain time the sale was voided. The mortgagee (creditor) held legal title, the mortgagor equitable title; both estates were salable. Today Great Britain and a majority of states in the United States view mortgages as liens on property. The practical result under the two systems is the same. If the mortgagor does not pay the debt, the creditor seeks a court-ordered sale of the property (foreclosure), and the debt is paid out of the proceeds. During economic depressions many jurisdictions enact temporary mortgage moratorium statutes that give courts the discretionary power to refuse to foreclose mortgages. In a reverse mortgage, a homeowner borrows against the value of a house to receive a line of credit or monthly payments. Reverse mortgages are used by elderly homeowners as a way of obtaining cash, and normally the loan is paid off when the homeowner dies (or sells the property).


 
Law Encyclopedia: Mortgage
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This entry contains information applicable to United States law only.

A legal document by which the owner (buyer) transfers to the lender an interest in real estate to secure the repayment of a debt, evidenced by a mortgage note. When the debt is repaid, the mortgage is discharged, and a satisfaction of mortgage is recorded with the register or recorder of deeds in the county where the mortgage was recorded. Because most people cannot afford to buy real estate with cash, nearly every real estate transaction involves a mortgage.

The party borrowing the money and giving the mortgage (the debtor) is the mortgagor; the party paying the money and receiving the mortgage (the lender) is the mortgagee. Under early English and U.S. law, the mortgage was treated as a complete transfer of title from the borrower to the lender. The lender was entitled not only to payments of interest on the debt but also to the rents and profits of the real estate. This meant that as far as the borrower was concerned, the real estate was of no value, that is, "dead," until the debt was paid in full— hence the Norman-English name "mort" (dead), "gage" (pledge).

The mortgage must be executed according to the formalities required by the laws of the state where the property is located. It must describe the real estate and be signed by all owners, including nonowner spouses if the property is a homestead. Some states require witnesses as well as acknowledgement before a notary public.

The mortgage note, in which the borrower promises to repay the debt, sets out the terms of the transaction: the amount of the debt, the mortgage due date, the rate of interest, amount of monthly payments, whether the lender requires monthly payments to build a tax and insurance reserve, whether the loan may be repaid with larger or more frequent payments without a prepayment penalty, and whether failing to make a payment or selling the property will entitle the lender to call the entire debt due.

State courts have devised varying theories of the legal effect of mortgages: some treat the mortgage as a conveyance of the title, which can be defeated on payment of the debt; others regard it as a lien, entitling the borrower to all the rights of ownership, as long as the terms of the mortgage are observed. In California a deed of trust to a trustee who holds title for the lender is the preferred security instrument.

At common law, if the borrower failed to pay the debt in full at the appointed time, the borrower suffered a complete loss of title, however long and faithfully payments had been made.

Courts of equity, which were originally ecclesiastical courts, had authority to decide cases on the basis of moral obligation, fairness, or justice, as opposed to the law courts, which were bound to decide strictly according to the common law. Equity courts softened the harshness of the common law by ruling that the debtor could regain title even after default, but before it was declared forfeit, by paying the debt with interest and costs. This form of relief is known as the equity of redemption.

Now nearly all states have enacted statutes incorporating the equity of redemption, and many have also enacted periods of redemption, specifying lengths of time within which the borrower may redeem. Although some debtors, or mortgagors, are able to avoid foreclosure through equity of redemption, many are not, because redeeming means coming up with the balance of the mortgage plus interest and costs, something a financially troubled debtor may not be able to accomplish. However, because foreclosure upends the agreement between mortgagor and mortgagee and creates burdens for both parties, lenders are often willing to work with debtors to help them through a period of temporary difficulty. Debtors who run into problems meeting their mortgage obligations should speak to their lender about developing a plan to avert foreclosure.

Failure to redeem results in foreclosure of the borrower's rights in the real estate, which is then sold by the county sheriff at a public foreclosure sale. At a foreclosure sale, the lender is the most frequent purchaser of the property.

If the bid at the sale is less than the debt, even if it is for fair market value, the lender may be granted a deficiency judgment for the balance of the debt against the debtor, with the right to resort to other assets or income for its collection.

Often other creditors bid at the sale to protect their interest as judgment creditors, second mortgagees, or mechanic's lien claimants. All such persons must be notified of the foreclosure suit and given a right to bid at the sale to protect their claims. Similar protections are afforded transactions involving deeds of trust.

Subdivision or condominium development mortgages that cover a large tract of land are blanket mortgages. A blanket mortgage makes possible the sale of individual lots or units, with the proceeds applied to the mortgage, and partial release of the mortgage recorded to clear the title for that lot or unit.

Construction mortgages need special treatment depending on state construction lien law. Often the loan proceeds are placed in escrow with title insurance companies to make certain that the mortgage remains a first lien, with priority over contractors' construction liens.

Open-end mortgages make possible additional advances of money from the lender without the necessity of a new mortgage.

The time of repayment may be extended by a recorded extension of mortgage. Other real estate may be added to the mortgage by a spreading agreement. Mortgaged real estate may be sold, with the buyer taking either "subject to" or by "assuming" the mortgage. In the former case, the buyer acknowledges the existence of the mortgage and, upon default, may lose the title. By assuming the mortgage, the buyer promises to repay the debt and may be personally liable for a deficiency judgment if the sale brings less than the debt.

Lenders regularly assign mortgages to other investors. Assignments with recourse are guarantees by the one who assigns the mortgage that that party will collect the debt; those without recourse do not contain such guarantees. Assignments with recourse usually involve lower-risk properties or those of relatively stable or rising value. Assignments without recourse tend to involve riskier properties. Mortgages assigned without recourse are often sold at a price discounted well below their market value.

Before the Great Depression of the 1930s, most mortgages were "straight" short-term mortgages, requiring payments of interest and lump-sum principal, with the result that when incomes dropped, many borrowers lost their properties. That risk is minimized today because commercial lenders take fully amortized mortgages, in which part of the periodic payment applies first to interest and then to principal, with the balance reduced to zero at the end of the term.

Several agencies of the federal government have assisted the mortgage market by infusion of capital and by guarantees of repayment of mortgages. The Federal Housing Administration made possible purchases of real estate at low interest rates and with low down payments. The Veterans Administration also guarantees home loans to certain veterans on favorable terms. Both agencies contributed greatly to the growth of the housing market after World War II. In the late 1950s, private corporations began insuring repayment of conventional mortgages.

The Government National Mortgage Association (Ginnie Mae), created by the U.S. government in 1968, makes possible trading in mortgages by investors by guaranteeing mortgages-backed securities.

The Federal National Mortgage Association (Fannie Mae) is a private corporation, chartered by the U.S. government, that bolsters the supply of funds for home mortgages by buying mortgages from banks, insurance companies, and savings and loans.

Inflation in the 1970s made long-term fixed-rate mortgages less attractive to lenders. In response, lenders devised three types of mortgage loans that enable the rate of interest to vary in case of rises in rates: the variable-rate mortgage, graduated payment mortgage, and adjustable-rate mortgages. These mortgages are offered at initial interest rates that are somewhat lower than those for twenty- to thirty-year fixed-rate mortgages.

Home equity loans are typically second mortgages to the holder of the first mortgage, advancing funds based on a percentage of the owner's equity, that is, the amount by which the value of the real estate exceeds the first mortgage balance.

See: amortization.

 
Economics Dictionary: mortgage
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(mawr-gij)

A legal agreement that creates an interest in real estate between a borrower and a lender. Commonly used to purchase homes, mortgages specify the terms by which the purchaser borrows from the lender (usually a bank or a savings and loan association), using his or her title to the house as security for the unpaid balance of the loan.

 
Word Tutor: mortgage
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pronunciation

IN BRIEF: An agreement in which borrower gives the lender a claim to property as a pledge that the debt will be paid.

pronunciation When they bought their house, they needed to apply for a mortgage loan.

 
Blogs: Related blogs on: mortgage
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Misspellings: mortgage
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Common misspelling(s) of mortgage

  • morgage

 
Translations: Mortgage
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Dansk (Danish)
n. - pant, pantebrev, panterettighed
v. tr. - belåne, optage prioritetslån i

Nederlands (Dutch)
hypotheek, hypothecair, hypotheek nemen op

Français (French)
n. - (Fin, Jur) hypothèque, gage immobilier, nantissement
v. tr. - hypothéquer, grever, engager, mettre en gage

Deutsch (German)
n. - Hypothek
v. - mit einer Hypothek belasten

Ελληνική (Greek)
n. - (νομ.) υποθήκη
v. - υποθηκεύω

Italiano (Italian)
ipoteca, ipotecario

Português (Portuguese)
n. - hipoteca (f)
v. - hipotecar

Русский (Russian)
заклад, ипотека, закладная, закладывать, ручаться

Español (Spanish)
n. - hipoteca, hipotecario
v. tr. - hipotecar

Svenska (Swedish)
n. - inteckning, lån
v. - inteckna, lova bort

中文(简体)(Chinese (Simplified))
抵押, 精神负担, 义务, 使有义务, 献身于

中文(繁體)(Chinese (Traditional))
n. - 抵押, 精神負擔, 義務
v. tr. - 抵押, 使有義務, 獻身於

한국어 (Korean)
n. - 저당[권]
v. tr. - 저당 잡히다, 헌신하다

日本語 (Japanese)
n. - 抵当, 抵当に入れること, 抵当権, 抵当証書
v. - 抵当に入れる, 投げ出してかかる, 賭ける

العربيه (Arabic)
‏(الاسم) رهن (فعل) يرهن‏

עברית (Hebrew)
n. - ‮משכנתה, חוב הנשען על משכנתה‬
v. tr. - ‮משכן‬


 
Best of the Web: mortgage
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