Definition of a Mortgage Holder
A mortgage holder is an individual or entity who owns the mortgage loan that was extended to a homeowner, and is the party entitled to enforce the terms of the mortgage.
The mortgage holder is the party with the right to collect payments to repay the loan and in the event of default, they are entitled to foreclose on the mortgage.The mortgage holder will have the final say on whether the mortgage can be assumed by a third party, or whether the mortgage will be renewed. Another term for mortgage holder is “mortgagee”.
Example 1
Mr. McGillicuddy purchases a home and takes out a mortgage with the Bank. The Bank is the mortgage holder. The Bank has the right to receive payments and enforce the mortgage terms.
Transferring a Mortgage
Like a car, stock shares or even real estate itself, ownership of a mortgage loan may be transferred. The mortgage is transferred through an assignment of mortgage, meaning that the rights of the mortgage holder are transferred to a new party. The new party of the mortgage then becomes the new mortgage holder.
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Example 2
After extending a mortgage to Mr. McGillicuddy, The Bank then sells the mortgage to another Bank, lets call them Bank 2. Bank 2 becomes the new mortgage holder. Payments will be made to Bank 2, and Bank 2 holds the final decision as to whether the mortgage will be refinanced, renewed or will permit assumption of the mortgage. The original Bank is no longer a party to the mortgage.
Mortgage Servicing
On occasion, a mortgage servicing company will be retained by the mortgage holder to collect the payments of a mortgage holder. This type of relationship is similar to a real estate owner hiring a real estate management company to obtain tenants and collect rent on the property.
Like the real estate management company, the mortgage servicing company is only an agent for the mortgage holder, and does not own the mortgage, just like the real estate management company does not own the rental property.
At First Foundation, we are able to select from a large number of potential mortgage holders, just the right mortgage to match your personal needs. If you are considering refinancing your present mortgage or are a first time home-buyer contact us to discuss the various benefits offered by each of our mortgage holders.
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