Financial Borrowing and transactions have recently seen a considerable rise over the past few years. This is primarily because of the reason that financial transactions have now been facilitated as a result of the technological influx, which has greatly increased the convenience threshold of people involved in this regard. A mortgage is referred to as one aspect in financial markets that has evolved significantly over the past few years.
In literal terminology, it can be seen that mortgage refers to collaterals or assets that are required to obtain a loan. Understandably so, it involves two parties, referred to as a mortgagor and a mortgagee.
While on one hand, it can be seen that the mortgagee is used for the company or the financial institution that is servicing the loan, a mortgagor, on the other hand, is the person who borrows the loan from the respective party.
However, in addition to these basic differences, there are a couple of other differences between mortgagor and mortgagee that need to be accounted for in order to get a clear understanding regarding the fundamental differences between these two parties.
As far as mortgagors are concerned, it can be seen that they are the parties who apply (and subsequently obtain) the loan. In return, they are supposed to provide collaterals, against which the loan is issued to them.
The main reason behind these people setting assets and collaterals is the fact that they need to give certain security to the mortgagee (the giver of the loan), that the money will be repaid, and if not, they can use this collateral to cash out their finance.
Given the fact that they apply for the given loan, they are subsequently supposed to accept the terms and conditions that are put forth by the mortgagee, since he is the one who is granting the loan.
The mortgagor is also supposed to submit all the relevant documents to the company in order to prove his eligibility for the loan. The collateral that he offers to the mortgagee is supposed to be kept in possession of the mortgagee, till he settles the principal amount, as well as interest.
Mortgagors have the option to get various funding options that are contingent on the underwriting factors that are associated with loans. Given the fact that mortgage loans are safe loans, the common denominator amongst all types of mortgage loans.
In addition to this, the mortgagor is also supposed to submit credit reports in order for the mortgagee to be able to study the credit history, and decide on whether to give the loan or not.
As mentioned earlier, it can be seen that mortgagee is referred to as someone who lends money to the borrower, in order to enable him to purchase real estate. However, in order to mitigate the inherent credit risk involved with the purchase, the mortgagee often keeps real estate as a collateral, which can be used in the case where the mortgagor is unable to settle his debts.
The main aspect that needs to be accounted for by the mortgagee is the underlying risk involved pertaining to the risk associated with the transaction. Therefore, risk management tends to be one of the fundamental tasks that need to be undertaken by the mortgagee. In order to mitigate the inherent risk involved, the mortgagee is often required to establish a priority legal interest.
This is mainly created in the value of the property, which also includes probabilities of the mortgagee not being paid in full in the case where the mortgagor defaults. Therefore, it involves a perfected lien, as well as the title ownership.
Additionally, mortgagee also comes up and offers various innovative financial products to the users who are in search of finances. Therefore, these products can be chosen by the mortgagors as per their personal preference.
Therefore, it can be seen that mortgagor and mortgagee are terms that are clearly distinct in terms of their roles, and what they need to do in their respective areas. As a matter of fact, it can be seen that mortgagors need to ensure that they are supposed to ensure that they are able to maintain their standing in terms of timely payments, both interest, and principal so that their collateral is protected.
In the same manner, the mortgagee is supposed to ensure that their risk profile is properly managed so that there are no risks of payment defaults.