What Is a Mortgagee?

November 5, 2010 No Comments »
What Is a Mortgagee?

Are You a Mortgagee or Mortgagor?

It’s mortgage Q&A Friday! Today’s question: “What is a mortgagee?”

No, it’s not a typo. I didn’t leave an extra “e” on the word mortgage by mistake, though it may appear that way.

In short, a “mortgagee” is the entity that originates (makes) and holds the mortgage, otherwise known as the bank or the mortgage lender.

The mortgagee extends financing to the “mortgagor,” who is the homeowner or borrower in the transaction.

The property acts as collateral for the mortgage, and the mortgagee obtains a security interest in exchange for providing financing to the mortgagor.

If the mortgagor doesn’t make their mortgage payments, the mortgagee has the right to take back the property in question, typically through foreclosure.

It can eventually be sold by the mortgage lender to a third party to pay off any attached liens, or mortgages.

So if you’re still not sure, you are probably the mortgagor, also known as the homeowner with a mortgage. And your lender is the mortgagee.

What makes this particular issue confusing is that it’s the exact opposite when it comes to renters and landlords.

Yep, for some reason a landlord is known as a “lessor,” whereas the renter/tenant is known as the “lessee.” In other words, it’s the exact opposite for renters than it is for homeowners.

I suppose it makes sense that both landlord and borrower are property owners.

What About a Mortgagee Clause?

You may have also heard the term “mortgagee clause” when going through the loan process.

It refers to a legal document that protects the lender’s interest in the property in the event of any damage or loss.

It contains important information about the mortgagee/lender, including name, address, etc. so the insurance company knows exactly who has ownership in the event of a claim.

In summary:

Mortgagee: Bank or mortgage lender
Mortgagor: Borrower/homeowner (you!)

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