MORTGAGES
Mortgages are of two kinds, real and chattel. The first is a lien
on real estate, the second on personal property.
A mortgage may be defined as a conveyance of property, personal or
real, as security for the payment of a debt, or it may be given as
a guarantee for the performance of some particular duty.
MORTGAGE FORMS
When a mortgage is given as security for the payment of a debt,
the rule is to give a note for the payment of the amount involved.
The mortgage becomes in this case the security for the note's
payment.
In the body of the note it must be stated that it is secured by
mortgage.
The date of the note and mortgage should be the same.
The man who mortgages his property is the mortgagor.
The man to whom the mortgage is given is the mortgagee.
The form of the mortgage is the same as that of a deed, except
that it contains a clause called the Defeasance, which states that
when the obligation has been met the document shall be void.
MORTGAGES MUST BE RECORDED
The forms for "signing, sealing and delivering" a mortgage, are
the same as with a deed.
A mortgage must be recorded the same as a deed, the mortgagee
paying the fees.
Chattel mortgages are filed and recorded in the same way, except
that it is not usual to make copies of the instrument. They are
described in books prepared for the purpose.
A wife need not join her husband in making the note secured by a
mortgage, but if she agrees to the transaction it is necessary for
her to sign the mortgage; however, some states do not require
this.
PAYMENTS
Often a life insurance policy is used as security for the payment
of a mortgage.
The mortgagee, if there be buildings on the property, should see
that the buildings are insured and that the policy or policies are
made out in his name.
If the insurance policy is in the mortgagor's name he may collect
and keep the insurance money.
The mortgagor must meet, as stipulated, every payment of the
principal and interest.
Failure to meet one payment can result in a legal foreclosure.
When a payment is made, the date and the amount must be entered on
the back of the note. This should be done in the presence of the
mortgagor.
If possible always pay the obligation by check.
If a payment is accepted on a mortgage and the amount is not
sufficient to meet the sum required, the interest is first settled
in full, the rest is credited to the principal.
When the full amount, with interest, is paid in, it becomes the
duty of the mortgagee to have the mortgage "discharged."
A complete settlement is when, all payments being made, the
mortgagee surrenders the note and its security, and causes to be
written by the register, on the margin of the copy in his books,
the words, "discharged," or "satisfied," affixing thereto his
official signature and the date.
ASSIGNMENTS
A mortgage is regarded in law as personal property.
A mortgage need not remain in the hands of the mortgagee in order
to be valid. It can be sold like bonds, stocks or other property,
and there are men who deal only in that form of security.
In order to sell a mortgage, the owner must make, to the
purchaser, what is known as an "assignment of mortgage."
The assignment should be recorded in the same way as the original
mortgage, the assignee paying the fee.
REDEMPTION OF MORTGAGES
While the rule as to the redemption of mortgages remains the same
in some localities that it formerly was, the law in most places is
now more lenient.
Now the mortgagor who has failed is usually given by law an
extension of time in which to make good the payment of principal
and interest.
Lenders, when the interest is met, are content to let the mortgage
run on as an investment, though it will often be found, in such
cases, that it is better to make a new mortgage.
EQUITY OF REDEMPTION
Where the payments on a mortgage have not been met and the
instrument has not been foreclosed, the mortgagor has still what
is known as an "equity of redemption."
In some states after the foreclosure of the mortgage and the sale
of the property there is still a period of redemption of from
sixty days to six years.
The mode of foreclosure differs in some states. The usual method
is to foreclose on an order from the court, and to have the sale
conducted by a court officer.
The proceeds from the sale are used to pay the principal,
interests and costs. If there is money left over it is paid to the
mortgagor, whose interests in the property are then at an end.
Many people, not familiar with business methods, are inclined to
regard a mortgage as something of a disgrace, when, as a matter of
fact it is a most usual and honorable means of raising money for
the securing of a home or the conducting of a business.
Nearly all of the great railroads of the country have been built
by the sale of the mortgage bonds, which are usually renewed when
due, and are sought out as a safe and sane form of investment.
The fact that a mortgage payment has to be met on a farm is often
in itself the strongest inducement to industry and economy.
