Buyers, sellers, real estate brokers, even bankers sometimes mix up “mortgagor” and “mortgagee.” The confusion comes from getting backwards who actually does the mortgaging.
Who gives the mortgage to whom
Most home buyers say they’ll go to a lender “to get a mortgage,” and real estate brokers talk the same way: “We’ll find a bank to give you a mortgage.”
That’s all wrong, though. The home buyer is the one who gives the mortgage to the bank.
A mortgage is a financial claim against property. The property buyer signs a document giving that claim (a lien) to the lender, and in return the lender gives the buyer money.
The two documents the borrower signs
The buyer gives the lending institution two things:
- A note or bond. This is a personal promise to repay the loan, just like any promissory note.
- A mortgage (in some states, a trust deed). This says, “and if I don’t pay as promised, you can take the property.”
The buyer mortgages the property. The lender takes the mortgage and holds it until the debt is paid off.
A memory trick for mortgagor and mortgagee
The person who performs the action is the “-or” or “-er” word. Think of “employer” or “donor.” That makes the borrower the mortgagor: he or she is doing the mortgaging.
The bank, or other lender, takes the buyer’s mortgage. The one who receives is always the “-ee” word. That makes the lender the mortgagee.
To remember the difference, notice that “borrower” has two o’s in it, and so does “mortgagor.” “Lender,” on the other hand, has two e’s, and so does “mortgagee.”
