What is a Mortgage or Deed of Trust?

If I were to tell you that you will be required by your lender {mortgagee} to give a Death Pledge to buy or refinance your next home would you might think twice and would you want to know more about to whom you were entering into a mortgage agreement with?

To understand what is a mortgage is you first have to understand the etymology {history}  of the word mortgage.

It is said that the first mortgage ever recorded dates to 1190 in England. Common English Law provided protections to the grantee (lender) of that mortgage loan and these protections granted the lender in the borrowers property.

At that time most pledges or loans were what was known as “Living Pledges”  which were just that pledges of possessions while one was living until the debt was paid.

Death Pledge

By contrast the word “Mortgage” is the opposite of the Living Pledge . It is a compound word from the Latin words Mort-Gage.  Literally translated Mort means death Gage which means pledge.

mortgage = death pledge

Lets re-cap Mortgage means “Death-Pledge“.   We call it a Death Pledge because the deal dies when the terms have been fulfilled by amortizing (payment in full)  or terminated by breach aka forfeiture (foreclosure).

A very simple definition of mortgage is the voluntary lien or  security interest granted by the borrower {mortgagor} to the Lender {mortgagee} and placed upon a property that is pledged as security {collateral}.

Once recorded in the Registrar of Deeds where the property is located the lien identifies the lenders and borrowers rights, provides “Constructive Notice”  and establishes the lien priority.

Note: The borrower {mortgagor} retains full rights, responsibility  and ownership of the property through what is known as  Hypothecation or to pledge as security without delivery of title or possession.

If I were to tell you that you will be required by your lender {mortgagee} to give a Death Pledge to buy or refinance your next home would you might think twice and would you want to know more about to whom you were entering into a mortgage agreement with?

For this Reason you Should Choose your lender wisely 

Deed of Trust is What Pledges the property as security to the note
Deed of Trust is What Pledges the property as security to the note

If you have obtained or even applied for a mortgage loan within the past two years you might have been surprised by the rigors you were subjected to by your lender to establish your worthiness to enter into that covenant.

The lender checked your assets, your credit, your income and whether or not the loans was beneficial to them and you.

They also closely examined the property and its market value and if you made it through these rigors, they granted you the loan.

But what about the lender? What  have you the grantor of the mortgage and all the above pledges done to ensure that your lender {mortgagee} is a party that you want to pledge your property until death?

If you don’t think  that matters – just check out some of the comments here of some real life mortgagors who are just trying to get their homes repaired after a disaster has left it damaged and need to have their home owners insurance claim settlement checkmortgage deed of trust document cashed in order to pay for the repairs.

This article was written by ricardocobos

Since relocating from Northern Michigan in 2007 I have lived in Garner (27529) with my wife Melanie and our four children. I am a local market expert in southern Wake County in the following communities: Garner (27529), Fuquay-Varina (27526), Holly-Springs (27540), Apex (27502), and Raleigh (27603) which spans from downtown Raleigh to Willow Spring including Lake Wheeler. Call or email me, I’m here to help! Ricardo Cobos (919) 526-0183

Comments

  1. […] What is a Mortgage? (via Raleigh Mortgage Guy) July 22, 2011 Drew Ludlow, Realtor/Broker Leave a comment Go to comments To understand what is a mortgage is you first have to understand the history or the etymology of the word mortgage. It is said that the first mortgage ever recorded dates to 1190 in England. Common English Law provided protections to the grantee (lender) of that mortgage loan and these protections granted the lender in the borrowers property. At that time most pledges or loans were what was known as "Living Pledges"  which were just that pledges … Read More […]