A mortgage loan is a form of personal financing in which a piece of real property is used as collateral to secure the repayment of a loan. The financial obligation is evidenced by a mortgage note, which is the contract between the parties, and the mortgage itself, which is the encumbrance upon the property that is recorded in the public records. The owner of the property and the one who gives the interest in the property is the mortgagor and the lender who receives the interest in the property is the mortgagee. If a mortgage goes unpaid, the mortgagee is granted the right to foreclose, or close out the rights of the mortgagor.
Mortgages loans vary widely in terms of amount, repayment terms, interest rates, and other provisions. It is quite common in the United States to mortgage the purchase of almost any real property, as few individuals have sufficient savings to make such a large purchase on their own. Mortgage loans are also frequently used to access equity in a property, or the difference between the value of the land and the amount financed. These are often called second mortgages or home equity loans.
However, as part of the banking and finance industry, mortgage loans are heavily regulated by both state and federal law. Similarly, because the interest in the mortgage itself can be assigned or transferred, the secondary sale of these loans are treated as a secured transactions subject to oversight by the Securities and Exchange Commission (SEC).
This secondary sale of mortgage interests came to national attention during the economic downturn that occurred after 2005 when it was discovered that a number of large banks had been improperly transferring mortgage obligations. In many instances, auditing and disclosure requirements were ignored, securities registration requirements were not followed, and a practice of transferring mortgage interests (sometimes multiple times) without any corresponding paper trail (part of a practice later dubbed “robo-signing”) made national news and led to the downfall of several banks and law firms.
If you have questions about mortgage laws or need legal assistance with your mortgage related issues, you can either review the materials below or locate an attorney in your area by visiting our Law Firms page.
Mortgage Law - US
- ABA - Consumer Financial Services Committee
The Consumer Financial Services Committee caters to lawyers that practice in the area of consumer financial services law. Committee membership represents both industry interests and consumers, and hails from private practice, government, the non-profit sector, and educational institutions. The Committee focuses on new developments in consumer financial services law relating to residential mortgage and personal property finance; truth in lending; financial privacy, credit reporting, information security and identity theft; federal preemption of state and local laws; electronic delivery of consumer financial services; stored value and credit cards; credit discrimination and access to financial services; litigation and arbitration; and debt collection and consumer bankruptcy.
- Fair Housing Act
Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD's Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. The Fair Housing Act makes it unlawful to engage in the following practices based on race, color, national origin, religion, sex, familial status or handicap (disability) * Refuse to make a mortgage loan * Refuse to provide information regarding loans * Impose different terms or conditions on a loan, such as different interest rates, points, or fees * Discriminate in appraising property * Refuse to purchase a loan or set different terms or conditions for purchasing a loan.
- FHA Mortgage Limits
Welcome to the FHA Mortgage Limits page. This page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.
- HUD - Departmental Enforcement Center (DEC)
The DEC focuses on assuring the highest standards of ethics, management and accountability in the resolution of HUD's troubled properties. The DEC's primary goal is to bring owners to full compliance so that there is no compromise in the quality of America's housing. To a large extent, owners have agreed to work with HUD to prevent possible enforcement action. Such a proactive stance on the part of owners is in the best interest of all parties, especially for residents.
- HUD - Federal Housing Administration
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
- HUD Approved Housing Counseling Agencies
HUD sponsors housing counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, and credit issues. This page allows you to select a list of agencies for each state below. You may search more specifically for a reverse mortgage counselor or if you are facing foreclosure, search for a foreclosure avoidance counselor.
- Mortgage Borrowers' Rights
This may be the largest and most important loan you get during your lifetime. You should be aware of certain rights before you enter into any loan agreement.
- Mortgage Fraud and Identity Theft Resources - Victims of Mortgage Fraud
When homeowners or borrowers suspect they may be a victim of a Con-Artist’s work, they have many legal resources available to help them. Potential victims need to report mortgage fraud, mortgage scams, or predatory lending practices as soon as there is an indication these might exist. Waiting to make sure can be costly. Both on the national level and on the state level, government and private organizations are available to answer questions and provide help.
- Mortgage Law - Definition
A mortgage is a security interest in real property held by a lender as a security for a debt, usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.
- Mortgage Law - Overview
A mortgage involves the transfer of an interest in land as security for a loan or other obligation. It is the most common method of financing real estate transactions. The mortgagor is the party transferring the interest in land. The mortgagee, usually a financial institution, is the provider of the loan or other interest given in exchange for the security interest. Normally, a mortgage is paid in installments that include both interest and a payment on the principle amount that was borrowed. Failure to make payments results in the foreclosure of the mortgage.
- Negotiable Instruments Law
Negotiable instruments are mainly governed by state statutory law. Every state has adopted Article 3 of the Uniform Commercial Code (UCC), with some modifications, as the law governing negotiable instruments. The UCC defines a negotiable instrument as an unconditioned writing that promises or orders the payment of a fixed amount of money.
- Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) charters, regulates, and supervises all national banks. It also supervises the federal branches and agencies of foreign banks. Headquartered in Washington, D.C., the OCC has four district offices plus an office in London to supervise the international activities of national banks.
- Office of Thrift Supervision
The OTS supervises a national thrift industry that is built on the bedrock of the American dream of homeownership—supplying affordable home financing for Americans from all walks of life.
- Predatory Lending
Over the last several years, our nation has made enormous progress in expanding access to capital for previously under served borrowers. Despite this progress, however, too many families are suffering today because of a growing incidence of abusive practices in a segment of the mortgage lending market. Predatory mortgage lending practices strip borrowers of home equity and threaten families with foreclosure, destabilizing the very communities that are beginning to enjoy the fruits of our nation’s economic success.
- Real Estate Settlement Procedures Act
HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and that closing agents provide borrowers with a new HUD-1 settlement statement. New RESPA regulations were published November 17, 2008 and are scheduled to take full effect on January 1, 2010. The "New RESPA Rule FAQs" were comprised from industry questions and are posted to facilitate implementation of these new requirements.
- Secured Transactions Law
A security interest arises when in exchange for a loan a borrower agrees, in a security agreement, that the lender (the secured party) may take specified collateral owned by the borrower if he or she should default on the loan. A security interest also provides the secured party with the assurance that if the debtor should go bankrupt he or she may be able to recover the value of the loan by taking possession of the specified collateral instead of receiving only a portion of the borrowers property after it is divided among all creditors.
Organizations Related to Mortgage Law
- Americans for Fairness in Lending (AFFIL)
Americans for Fairness in Lending (AFFIL) and Americans for Financial Reform (AFR) are partnering to reform the nation’s lending industry and financial system to protect Americans’ neighborhoods, homes and pocketbooks.
- Federal Home Loan Mortgage Corporation (Freddie Mac)
* Company Profile o Our Mission o Our Leadership o Our Business o Our Role State-by-State o FAQs o Contact Us * News and Information Center * Corporate Citizenship * Investor Relations * Careers Company Profile Every day we help millions of families in neighborhoods across America buy their own homes or enjoy quality and affordable rental housing by linking them to the world's capital markets. In the process we reduce the costs of housing finance and expand housing opportunities for all families, including low-income and minority families. It is a unique mortgage finance system that makes homeownership a reality for more of America's families.
- Federal National Mortgage Association (Fannie Mae)
Fannie Mae operates in the U.S. secondary mortgage market. Rather than making home loans directly to consumers, we work with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates. We fund our mortgage investments primarily by issuing debt securities in the domestic and international capital markets.
- Government National Mortgage Association (Ginnie Mae)
At Ginnie Mae, we help make affordable housing a reality for millions of low- and moderate-income households across America by channeling global capital into the nation's housing markets. Specifically, the Ginnie Mae guaranty allows mortgage lenders to obtain a better price for their mortgage loans in the secondary market. The lenders can then use the proceeds to make new mortgage loans available.
- Making Home Affordable - Mortgage Relief
In February 2009, the Obama Administration introduced a comprehensive Financial Stability Plan to address the key problems at the heart of the current crisis to get our economy back on track. A critical piece of that effort is Making Home Affordable, a plan to stabilize the housing market and help struggling homeowners get relief and avoid foreclosure.
- Mortgage Help Now
The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation's largest and longest serving national nonprofit credit counseling organization. The NFCC's mission is to promote the national agenda for financially responsible behavior and build capacity for its members to deliver the highest quality financial education and counseling services. NFCC members annually help more than two million consumers through nearly 1,000 community-based offices nationwide.
- Mortgage Servicing Fraud
These companies do not loan money. They operate in the lending industry after-the-fact. They take on a function that a lender doesn’t want - the backroom functions of handling payments, escrow accounts, annual statements, dealing with borrowers, collections, etc. The perpetrators of the loan servicing scam acquire the servicing rights to loans that other companies have already made. (Loans that were deliberately constructed by predatory lenders are ideal for processing through servicers that specialize in aggressive collections or rapid foreclosure processing, but the loan servicing scam can be operated against any mortgage loan if the servicer acquires the rights from the lender.)
Publications Related to Mortgage Law
- ABA Committee on Consumer Financial Services - Mortgage Loans
Consumer credit can be complicated. From the unusual legal terms to the complex mathematical formulas, understanding how credit works can be a big task. The Committee on Consumer Financial Services of the Business Law Section of the American Bar Association has created this website to provide you with the tools to help you on your way to financial success.
- HUD - Federal Housing Administration (FHA) Handbook
The Federal Housing Administration (FHA) Handbook portal contains the Single Family Housing handbooks in Information Mapping format as well as links to Mortgagee Letters and other resources on the Housing and Urban Development (HUD) website. The online 4155.1 and 4155.2 Handbooks incorporate and consolidate guidance from Handbooks 4155.1 REV-5, 4000.2 REV-3, 4000.4 REV-1, 4165.1 REV-2 and related Mortgagee Letters.
- National Mortgage News
National Mortgage News is a weekly newspaper covering the mortgage sector in the United States.
Articles on HG.org Related to Mortgage Law
- Benefits of Filing for Chapter 13 BankruptcyThe life situations that lead to the necessity of filing Chapter 13 bankruptcy are dire and filled with monetary problems where the borrower is unable to pay back his or her debts. However, even in the event where a Chapter 13 is the only possible conclusion, there are benefits that may protect and help the applicant.
- Responding to a Creditor Lawsuit if Filing for BankruptcyWhen filing for bankruptcy, it is important to receive letters and information from current creditors while refraining from an immediate response. During these processes, it is essential to have a professional such as a lawyer to assist with the matter and ensure that all creditors acquire the necessary response per the legal representative.
- Can Bankruptcy Solve Home Mortgage Problems?Home mortgage problems often lead to default and foreclosure of the property the individual is attempting to purchase. While bankruptcy may be the last resort to solve any financial difficulty, some homeowners seek this process to try to stop a foreclosure from taking the home away.
- Effects on Credit after BankruptcyBankruptcy is a serious process, and only those that are fully aware of what this entails should proceed with all appropriate files, records and information supplied to the officials. The effects this method of debt erasure cause are often negative and detrimental to the credit of applicants seeking to remove arrears.
- Bankruptcy Exemptions in Texas FilingsTexas bankruptcy filings are similar to those found in other regions of the country, but there are certain exemptions available based on specific factors. Most of these exemptions exist with what is possible to retain after the procedure has completed, and this is most beneficial to landowners and those that want to keep their vehicles.
- Filing for Divorce When also Filing for BankruptcyGoing through a divorce is often difficult and may become a tricky and emotional affair, but doing so while also filing for bankruptcy is enough to break a person. It is recommended to have a lawyer for divorce proceedings, and this could affect how the bankruptcy procedure works and what is affected by either spouse.
- Keeping Your Motor Vehicle after Filing for BankruptcyWhen filing bankruptcy, it is likely that most assets may be removed to pay for debts depending on the chapter filed, and for those with few means of travel, it is essential to keep that vehicle after the process has completed. It is important to know what is needed when car payments are behind, and bankruptcy has started.
- Planning for Reorganization in a Chapter 11 BankruptcyWhen a company is unable to remain open for business under the current capacity, bankruptcy is often the option chosen through Chapter 11 to remain functional and keep revenue incoming. While this type of bankruptcy is a reorganization that permits the owner to plan and restructure the company to stay open, most of the assets and other items are sold off when a Chapter 11 is initiated.
- Home Equity Lost Because Seller/Mortgager Misclassified the Type of HomeThere are various complications that may arise when attempting to acquire or secure home equity in a sale or purchase based on the actions of the buyer or seller. When this occurs, it is important to understand what occurred, how to proceed and if a lawyer’s assistance is necessary to seek a resolution for the problem.
- Utilizing the Bankruptcy Mean TestPreparing for bankruptcy is often difficult, but the person affected must ensure he or she qualifies based on certain criteria such as the bankruptcy mean test. This is used to determine if the person has low enough income to file Chapter 7 when bankruptcy is the only way out of financial ruin and needed to resolve these matters.
- All Debtor and Creditor Law Articles
Articles written by attorneys and experts worldwide discussing legal aspects related to Debtor and Creditor including: bankruptcy, collections, credit and mortgage, debt recovery and insolvency.