Mortgage Creditor
June 18, 2009 Mortgage Finance
A mortgage is, of course, a type of loan and the lender of the amount originally borrowed becomes a creditor. From a lender’s point of view, acting as creditor in a mortgage arrangement carries both advantages and disadvantages compared to other more conventional loan types. On one hand, the borrower has greater defined legal privileges than is common with other forms of debt because legislators have recognized that having a home is fundamental to the life of any citizen. On the other, should the borrower default, the creditor has contractually specified collateral to take possession of in order to make good on the debt. In addition, unlike many other forms of used goods, there is a ready market for the sale of used accommodation.
In most cases, the original lender remains the creditor throughout the lifetime of the mortgage. However, it is sometimes the case that financial institutions sell on mortgages which customers have taken out with them to other financial institutions. After the sale, the buyer becomes the new creditor and any payments still due on the mortgage will go to it. In most cases, the mortgagor will be completely unaware that this transfer of ownership has taken place and will continue to make payments to the original financial institution as before. Those payments will then be forwarded to the new mortgage creditor.