mortgage (mor-gij), n. 1. A conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to the stipulated terms. — Also termed (archaically) dead pledge. [Cases: Mortgages 1. C.J.S. Mortgages §§ 2–6.] 2. A lien against property that is granted to secure an obligation (such as a debt) and that is extinguished upon payment or performance according to stipulated terms. [Cases: Mortgages 145.C.J.S. Mortgages §§ 198, 200.] 3. An instrument (such as a deed or contract) specifying the terms of such a transaction. 4. Loosely, the loan on which such a transaction is based. 5. The mortgagee’s rights conferred by such a transaction. 6. Loosely, any real-property security transaction, including a deed of trust. — Abbr. M. — mortgage,vb.

“The chief distinction between a mortgage and a pledge is that by a mortgage the general title is transferred to the mortgagee, subject to be revested by performance of the condition; while by a pledge the pledgor retains the general title in himself, and parts with the possession for a special purpose. By a mortgage the title is transferred; by a pledge, the possession.” Leonard A. Jones, A Treatise on the Law of Mortgages§ 4, at 5–6 (5th ed. 1908).

adjustable-rate mortgage.A mortgage in which the lender can periodically adjust the

mortgage’s interest rate in accordance with fluctuations in some external market index. — Abbr.

ARM. — Also termed variable-rate mortgage; flexible-rate mortgage.

all-inclusive mortgage.See wraparound mortgage.

amortized mortgage.A mortgage in which the mortgagor pays the interest as well as a portion of the principal in the periodic payment. • At maturity, the periodic payments will have completely repaid the loan. — Also termed self-liquidating mortgage. See AMORTIZATION(1). Cf. straight mortgage.

balloon-payment mortgage.A mortgage requiring periodic payments for a specified time and

a lump-sum payment of the outstanding balance at maturity.

blanket mortgage.A mortgage covering two or more properties that are pledged to support a


bulk mortgage. 1. A mortgage of personal property in bulk; a pledge of an aggregate of goods

in one location. 2. A mortgage of more than one real-estate parcel.

chattel mortgage (chat-<<schwa>>l). A mortgage on goods purchased on installment, whereby the seller transfers title to the buyer but retains a lien securing the unpaid balance. • Chattel mortgages have generally been replaced by security agreements, which are governed by

Article 9 of the UCC. Cf. retail installment contract under CONTRACT. [Cases: Chattel

Mortgages 1.]

closed-end mortgage.A mortgage that does not permit either prepayment or additional

borrowing against the collateral. Cf. open-end mortgage. — Also termed closed mortgage.

closed mortgage.See closed-end mortgage.

collateral mortgage.Civil law. A mortgage securing a promissory note pledged as collateral

security for a principal obligation.

common-law mortgage.See deed of trust under DEED. consolidated mortgage.A mortgage created by combining two or more mortgages.

construction mortgage.A mortgage used to finance a construction project.

contingent-interest mortgage.A mortgage whose interest rate is directly related to the

economic performance of the pledged property.

conventional mortgage.A mortgage, not backed by government insurance, by which the borrower transfers a lien or title to the lending bank or other financial institution. • These mortgages, which feature a fixed periodic payment of principal and interest throughout the mortgage term, are typically used for home financing. — Also termed conventional loan.

direct-reduction mortgage.An amortized mortgage in which the principal and interest payments are paid at the same time — usu. monthly in equal amounts — with interest being computed on the remaining balance. — Abbr. DRM.


dry mortgage.A mortgage that creates a lien on property but does not impose on the

mortgagor any personal liability for any amount that exceeds the value of the premises.

equitable mortgage.A transaction that has the intent but not the form of a mortgage, and that a

court of equity will treat as a mortgage. Cf. technical mortgage.

“Courts of equity are not governed by the same principles as courts of law in determining whether a mortgage has been created, and generally, whenever a transaction resolves itself into a security, or an offer or attempt to pledge land as security for a debtor liability, equity will treat it as a mortgage, without regard to the form it may assume, or the name the parties may choose to give it. The threshold issue in an action seeking imposition of an equitable mortgage is whether the plaintiff has an adequate remedy at law. In applying the doctrine of equitable mortgages doubts are resolved in favor of the transaction being a mortgage.” 59 C.J.S. Mortgages § 12, at 62 (1998). extended first mortgage.See wraparound mortgage.

FHA mortgage.A mortgage that is insured fully or partially by the Federal Housing Administration.

first mortgage.A mortgage that is senior to all other mortgages on the same property. [Cases:

Mortgages 151. C.J.S. Mortgages §§ 210–212, 226.]

fixed-rate mortgage.A mortgage with an interest rate that remains the same over the life of

the mortgage regardless of market conditions. — Abbr. FRM.

flexible-rate mortgage.1. See adjustable-rate mortgage. 2. See renegotiable-rate mortgage.

flip mortgage.A graduated-payment mortgage allowing the borrower to place all or some of the down payment in a savings account and to use the principal and interest to supplement lower mortgage payments in the loan’s early years.

future-advances mortgage.A mortgage in which part of the loan proceeds will not be paid

until a future date. [Cases: Mortgages 16, 116. C.J.S. Mortgages §§ 154–156.]

general mortgage.Civil law.A blanket mortgage against all the mortgagor’s present and future

property. La. Civ. Code art. 3285.

graduated-payment adjustable-rate mortgage.A mortgage combining features of the

graduated-payment mortgage and the adjustable-rate mortgage. — Abbr. GPARM.

graduated-payment mortgage.A mortgage whose initial payments are lower than its later payments. • The payments are intended to gradually increase, as the borrower’s income increases over time.

growing-equity mortgage.A mortgage that is fully amortized over a significantly shorter term

than the traditional 25- to 30-year mortgage, with increasing payments each year. — Abbr. GEM. indemnity mortgage.See deed of trust under DEED.

interest-only mortgage.A balloon-payment mortgage on which the borrower must at first

make only interest payments, but must make a lump-sum payment of the full principal at maturity.

— Also termed standing mortgage; straight-term mortgage. — Abbr. IO mortgage.

joint mortgage.A mortgage given to two or more mortgagees jointly.

judicial mortgage.Civil law. A judgment lien created by a recorded legal judgment. [Cases:

Judgment 752–766. C.J.S. Judgments §§ 551–553, 555–560, 562, 566.]

jumbo mortgage.A mortgage loan in a principal amount that exceeds the dollar limits for a

government guarantee.

junior mortgage.A mortgage that is subordinate to another mortgage on the same property. —

Also termed puisne mortgage. [Cases: Mortgages 151. C.J.S. Mortgages §§ 210–212, 226.] leasehold mortgage.A mortgage secured by a lessee’s leasehold interest.

legal mortgage.Civil law. A creditor’s mortgage arising by operation of law on the debtor’s

property. — Also termed tacit mortgage. open-end mortgage.A mortgage that allows the mortgagor to borrow additional funds against

the same property. Cf. closed-end mortgage.

package mortgage.A mortgage that includes both real and incidental personal property, such

as a refrigerator or stove.

participation mortgage. 1. A mortgage that permits the lender to receive profits of the venture

in addition to the normal interest payments. 2. A mortgage held by more than one lender.

price-level-adjusted mortgage.A mortgage with a fixed interest rate but the principal balance

of which is adjusted to reflect inflation. — Abbr. PLAM.

puisne mortgage.See junior mortgage.

purchase-money mortgage.A mortgage that a buyer gives the seller, when the property is conveyed, to secure the unpaid balance of the purchase price. — Abbr. PMM. See SECURITY

AGREEMENT. [Cases: Mortgages 1, 115. C.J.S. Mortgages §§ 2–6, 151.]

renegotiable-rate mortgage.A government-sponsored mortgage that requires the mortgagee to renegotiate its terms every three to five years, based on market conditions. — Also termed flexible-rate mortgage; rollover mortgage.

reverse annuity mortgage.A mortgage in which the lender disburses money over a long period to provide regular income to the (usu. elderly) borrower, and in which the loan is repaid in a lump sum when the borrower dies or when the property is sold. — Abbr. RAM. — Also termed reverse mortgage.

rollover mortgage.See renegotiable-rate mortgage.

second mortgage.A mortgage that is junior to a first mortgage on the same property, but that

is senior to any later mortgage. [Cases: Mortgages 151. C.J.S. Mortgages §§ 210–212, 226.]


“A landowner who already holds land subject to a mortgage may wish to hypothecate his equity. He does this by taking out a ‘second mortgage.’ Should the mortgagor default in his obligation on the first mortgage, the first mortgagee may foreclose. If there is a deficiency upon sale, the second mortgagee loses his security in the equity because there is no equity. If the mortgagee does not default on the first mortgage, but does on the second, the second mortgagee can foreclose on the mortgagor’s equity. Such a foreclosure would not affect the first mortgagee’s rights.” Edward H. Rabin, Fundamentals of Modern Real Property Law 1087 (1974).

self-liquidating mortgage.See amortized mortgage.

senior mortgage.A mortgage that has priority over another mortgage (a junior mortgage) on

the same property. [Cases: Mortgages 151. C.J.S. Mortgages §§ 210–212, 226.]

shared-appreciation mortgage.A mortgage giving the lender the right to recover (as contingent interest) an agreed percentage of the property’s appreciation in value when it is sold or at some other specified, future date. — Abbr. SAM.

shared-equity mortgage.A mortgage in which the lender shares in the profits from the property’s resale. • The lender must usu. first purchase a portion of the property’s equity by providing a portion of the down payment. special mortgage.Civil law. A mortgage burdening only particular, specified property of the

mortgagor. La. Civ. Code art. 3285.

standing mortgage.See interest-only mortgage.

straight mortgage.A mortgage in which the mortgagor is obligated to pay interest during the mortgage term along with a final payment of principal at the end of the term. Cf. amortized mortgage.

straight-term mortgage.See interest-only mortgage.

submortgage. See SUBMORTGAGE.

tacit mortgage.See legal mortgage.

technical mortgage.A traditional, formal mortgage, as distinguished from an instrument

having the character of an equitable mortgage. Cf. equitable mortgage.

VA mortgage.A veteran’s mortgage that is guaranteed by the Veterans Administration.

variable-rate mortgage.See adjustable-rate mortgage.

Welsh mortgage.A type of mortgage, formerly common in Wales and Ireland, by which the mortgagor, without promising to pay the debt, transfers title and possession of the property to the mortgagee, who takes the rents and profits and applies them to the interest, often with a stipulation that any surplus will reduce the principal. • The mortgagee cannot compel the mortgagor to redeem, and cannot foreclose the right to redeem, because no time is fixed for payment. The mortgagor is never in default, but may redeem at any time.


wraparound mortgage.A second mortgage issued when a lender assumes the payments on the borrower’s low-interest first mortgage (usu. issued through a different lender) and lends additional funds. • Such a mortgage covers both the outstanding balance of the first mortgage and the additional funds loaned.12 CFR § 226.17 cmt. 6. — Also termed extended first mortgage; all-inclusive mortgage.

zero-rate mortgage.A mortgage with a large down payment but no interest payments, with the

balance paid in equal installments.

[Blacks Law 8th]