Hello and welcome to my blog today.
A beautiful morning and new week to you all from my part of the world. My post today will be focused on the theories of mortgage. In my previous post so weeks back, i clearly explained what Mortgage is all about hence my post today will be just about the theories of mortgage and they are;
1. The Lien Theory.
The mortgage resembles a lien or an encumbrance on the property, such that the mortgagee(lender) acquires only a mere lien or interest on the property and the mortgagor(borrower) obtains both legal and equitable titles unless foreclosure occurs. The lien theory state of a borrower defaults or fails to meet the terms of the mortgage the lender may go through formal foreclosure proceedings in court in order to gain legal tithe to secure the repayment of the loan.
2. The Title Theory.
This theory implies that a mortgagor transfer legal title of the property to the mortgagee(lender) who retains it until the mortgage has been satisfied or foreclosure occurs. In countries that follow the title theory, the title to the mortgage property is split into legal title granted to the lender and an equitable title granted to the borrower. When the borrower has met the demand of the mortgage then he is entitled to legal title as well. Until the debt is repaid, the lender retains ownership of the mortgaged property while the borrower retains possession.
3. The Intermediate Theory.
The intermediate theory is a hybrid of both the title and the lien theories. It is similar to the lien theory, which applies until there is a default on the mortgage where upon the title theory applies.
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