Banks often charge a higher interest rate than variable rate mortgages to offset this potential loss. Many typically pay more interest on a fixed-rate mortgage if they choose a thirty-year option. In some jurisdictions, mainly in the United States,[17] mortgages are non-recourse loans: if the funds recovered from the sale of the mortgaged property are insufficient to cover the outstanding debt, the lender cannot resort to the borrower after foreclosure. In other jurisdictions, the borrower remains liable for all remaining debts through a judgment of default. In some jurisdictions, initial mortgages are non-recourse loans, but second and subsequent mortgages are recourse loans. In the UK, HSBC was the first major bank to offer Islamic mortgages. A dead pledge is a device used to create a lien on real estate by contract. It is used as a method by which individuals or businesses can purchase residential or commercial real estate without paying the full value upfront. The borrower (called a mortgagee) uses a mortgage to pledge real estate to the lender (called a mortgagee) as debt security (also called a mortgage) for the remainder of the value of the property. In legal terms, the creation of a hypothec gives the mortgagee legal title to the property and the mortgagee a fair title (called «redemption equity»). However, legal title exists only as security for a debt and does not transfer any title or authority associated with real estate. Unlike the stability of fixed-rate loans, variable-rate mortgages (MRAs) have fluctuating interest rates that can rise or fall with market conditions. Many ARM products have a fixed interest rate for a few years before the loan moves to a variable rate for the remainder of the term.
For example, you might see a 7-year/6-month MRA, which means your rate stays the same for the first seven years and adjusts every six months after that first period. If you`re considering an MRA, it`s important to read the fine print to find out how much your rate can increase and how much you could pay after the introductory period expires. Fixed-rate mortgages keep the same interest rate for the duration of your loan, which means your monthly mortgage payment will always remain the same. Fixed loans typically have a term of 15 years or 30 years, although some lenders allow borrowers to choose a term of between eight and 30 years. There are many types of mortgages. The two main types of amortized loans are fixed-rate mortgages (MRIs) and variable-rate mortgages (MRAs). In most jurisdictions, a lender can seal the mortgaged property if certain conditions – primarily non-payment of the mortgage – are met. Enforcement will be judicial or extrajudicial (extrajudicial), depending on whether the jurisdiction in which the property to be executed issues mortgages according to the theory of title or lien, and again according to the type of security used to secure the loan. Subject to local legal requirements, the property may then be sold. All amounts received from the sale (less costs) will be deducted from the original debt. The so-called «debt guarantee deed» is a hedging instrument used in the State of Georgia to secure a debt by transferring legal title to real estate. Although it is referred to in the Official Code of Georgia (the «O.C.G.A.») as an «absolute transfer» of ownership, in fact this is not the case, because the settlor of the deed in this system retains the «justice of repossession», also known as «fair title».
The Georgian type of «debt guarantee deed» is described in the O.C.G.A. § 44-14-60, which states (somewhat oxymoronic): «Such a transfer must be regarded by the courts as an absolute transfer,.. (presumably means an effective transfer of «absolute» or «perfect» ownership to the beneficiary) «. the right reserved by the grantor to have the property returned to him against payment of the debt(s) to be secured by mutual agreement under the contract,.. (In other words, the grantor retains «just title», also known as equity of withdrawal, which appears to contradict the preceding sentence in the same sentence) «. and are not considered a mortgage. (which is true, but only in a «theory of privilege» jurisdiction). Despite the assertion within the O.C.G.A. «Definitive assignment», i.e.
the fact that the grantor of a security instrument retains adequate title to the deed, means that the transfer of title by that security instrument is in fact not absolute but conditional and that the security instrument effectively acts as a hypothec interpreted under the doctrine of title.
