Mortgagee

A mortgagee is an organization or an individual who has concluded an agreement with the borrower and transfers a certain amount of money to him for buying a property. In the mortgage process, the lender acts as the mortgagee and the borrower is referred to as the mortgagor. 

Duties of Mortgagee

A mortgage loan is a long-term loan provided by banks and secured by real estate: commercial and residential premises. A perfected lien – a pre-emption right of the lender to satisfy his claims through the sale, seizure of the pledged property in case of non-fulfillment  of the obligation by the borrower – and a title ownership put a ceiling on the potential loss a mortgagee can face while lending money.

The mortgagee acts for the lending financial institution in the mortgage process. Such financial institutions provide borrowers with a wide range of products that make up a substantial part of loan assets. 

Mortgage products

Mortgagees are able to take out both fixed and variable interest rate loans. The most common option is issuing amortized mortgage loans to borrowers. It means that the borrower makes regular loan repayments calculated taking into account interest, the loan term and the cost of real estate. The most popular type of mortgage taken out by the mortgagees is an installment loan that has a fixed interest rate. 

They also have the right to offer non-amortizing loans to mortgagors. It is a kind of a loan, on which interest is paid before the expiration of its term (sometimes they are not required), and the principal amount is repaid at the end of the term in a lump sum. Nevertheless, such loans are often associated with a high level of risk. 

Protection of Mortgagee's rights

There are general and particular ways to protect the civil rights of participants in collateral legal relations. Most of the methods of protection belong to the mortgagee. The loan agreement must specify the right (ownership, lease, etc.) of the mortgagee for the property. The property that serves as a collateral remains with the mortgagee in his possession and use. This safeguards the lenders from default. Nevertheless, if the borrower stops making payments on a debt, the mortgagee can take actions to seize collateral, that is property. That’s why a perfected lien and integrate title rights are usually specified in the contract.

A perfected lien arises if the debtor fails to fulfill the obligations secured with the mortgage. It is generally made up by a mortgagee’s legal counsel to obtain possession over property once there is default on the mortgage loan.