Chapter III - continued
Often a life insurance policy is used as security for the payment of a mortgage.
The mortgagee, if there be buildings on the property, should see that the buildings are insured and that the policy or policies are made out in his name.
If the insurance policy is in the mortgagor's name he may collect and keep the insurance money.
The mortgagor must meet, as stipulated, every payment of the principal and interest.
Failure to meet one payment can result in a legal foreclosure.
When a payment is made, the date and the amount must be entered on the back of the note. This should be done in the presence of the mortgagor.
If possible always pay the obligation by check.
If a payment is accepted on a mortgage and the amount is not sufficient to meet the sum required, the interest is first settled in full, the rest is credited to the principal.
When the full amount, with interest, is paid in, it becomes the duty of the mortgagee to have the mortgage "discharged."
A complete settlement is when, all payments being made, the mortgagee surrenders the note and its security, and causes to be written by the register, on the margin of the copy in his books, the words, "discharged," or "satisfied," affixing thereto his official signature and the date.
A mortgage is regarded in law as personal property.
A mortgage need not remain in the hands of the mortgagee in order to be valid. It can be sold like bonds, stocks or other property, and there are men who deal only in that form of security.
In order to sell a mortgage, the owner must make, to the purchaser, what is known as an "assignment of mortgage."
The assignment should be recorded in the same way as the original mortgage, the assignee paying the fee.
REDEMPTION OF MORTGAGES
While the rule as to the redemption of mortgages remains the same in some localities that it formerly was, the law in most places is now more lenient.
Now the mortgagor who has failed is usually given by law an extension of time in which to make good the payment of principal and interest.
Lenders, when the interest is met, are content to let the mortgage run on as an investment, though it will often be found, in such cases, that it is better to make a new mortgage.
EQUITY OF REDEMPTION
Where the payments on a mortgage have not been met and the instrument has not been foreclosed, the mortgagor has still what is known as an "equity of redemption."
In some states after the foreclosure of the mortgage and the sale of the property there is still a period of redemption of from sixty days to six years.
The mode of foreclosure differs in some states. The usual method is to foreclose on an order from the court, and to have the sale conducted by a court officer.
The proceeds from the sale are used to pay the principal, interests and costs. If there is money left over it is paid to the mortgagor, whose interests in the property are then at an end.
Many people, not familiar with business methods, are inclined to regard a mortgage as something of a disgrace, when, as a matter of fact it is a most usual and honorable means of raising money for the securing of a home or the conducting of a business.
Nearly all of the great railroads of the country have been built by the sale of the mortgage bonds, which are usually renewed when due, and are sought out as a safe and sane form of investment.
The fact that a mortgage payment has to be met on a farm is often in itself the strongest inducement to industry and economy.