March 10, 2009
Mortgagee vs. Mortgagor
The English language has many peculiarities, and mortgagee versus mortgagor is another set. However, a cultural idiosyncrasy could be to blame.
In English, the “ee” suffix typically denotes the person in the lower or lesser position, like “attendee” (one who attends something, not the entity that sponsors the event). Similarly, the “or” suffix denotes power, as in “actor,” “operator” and “inventor.”
In the home loan business, the person who is paying on a mortgage may be widely considered to be the “mortgagee”–the person in the one-down position, the bug on the windshield of home ownership. That assumption is cultural, not linguistic.
When you take out a loan on your real property (real estate), you are the person in power. You are letting the bank take an option on your property, should you fail to make your payments. Like life insurance, it’s a gamble that favors catastrophe as far as the lender is concerned.
A blog caught my eye: To Mortgagees Who Want To Be Mortgage Free For Life. I read author Neil Venketramen’s ruminations without figuring out what he was getting at…except perhaps to post potentially income-earning links. Nonetheless, a point of correction is in order.
If Neil is addressing home-buyers who’d like to not be making monthly payments, very little of which goes toward actually paying for the house, and way too much goes toward lining the bank’s pockets with ill-gotten gain (because of usurious interest rates when calculated over the life of the loan rather than in 1/30th increments), he would more properly be understood by saying To Mortgagors Who Want to Be Debt Free for Life. It is the home buyer who grants the lender a default option on the property. Therefore, it is the home purchaser who is in the position of power — the “or” in the mortgage payoff or mortgage acceleration process.
Paying off your home years sooner can provide amazing relief from stress, peace of mind and security. Just remember, whether you pay off your home earlier, or take the traditional 15/30 years (20/40 in Canada), it is you, dear friend who is the actor, the operator, and the terminator of your mortgage’s final demise …through reclaiming your interest by buying out the lender.
Comments on Mortgagee vs. Mortgagor »
Steve @ 9:51 pm
The confusion arises from the misconception that a mortgage is a loan, and so shouldn’t the bank be the mortgagor (the loan giver) and the home-owner the mortgagee (the loan receiver)? But, a mortgage is NOT the loan – it is the security interest in the home. Mortgage = your home, as collateral for a loan. So the home owner is the mortgagor, giving the bank a mortgage a.k.a. security interest in your home a.k.a right to acquire your home (if you default on your loan payments), making the bank the receiver of the mortgage and therefore the mortgagee.
It’s a common misconception that these bank loans are called mortgages. Legally, they are not. They are loans in *exchange* for mortgages.
Lin Ennis @ 7:22 am
Dear Steve – THANK YOU for adding to the discussion. I hadn’t thought of your point that the mortgage is NOT the loan (I’m not in the mortgage business, so I’m learning as I’m go along).
“Giving the bank a … security interest in your home… [a] right to acquire your home (if you default on your loan payments).” Wow! All the more reason to pay off that home sooner rather than later. Basically, mortgage acceleration, then, is removing a ‘risk’ by taking the bank’s name off the paperwork as soon as possible!