MORTGAGES

A mortgage is a contract by which a person binds the whole or only a portion of his/her real property in favor of another (usually a lending institution) as security for the execution of some engagement (usually money being loaned), but without divesting ownership or possession.  A mortgage is a type of lien.

Definition of Mortgagor:  the person or entity with title giving the mortgage.

Definition of Mortgagee:  the person or lending institution receiving the mortgage.

Purchase Money Mortgage:  is a mortgage given concurrently with the buying of land.  The money given in exchange for the mortgage is used to purchase the land being conveyed and mortgaged.  Purchase Money Mortgages are sometimes given special treatment such as in bankruptcy.

First Mortgage: is the mortgage as to current unreleased mortgages that was recorded (filed at the courthouse) before any other mortgages.  The first in time is usually considered to be the first in right.  Therefore, a first mortgage is usually superior to a second or third mortgage.

Secondary Market Mortgage: is a mortgage that is given or arranged by a local lending institution and is then sold to a national lender.

DEEDS OF TRUST

A Deed of Trust is in simple terms a mortgage with an explicit power of sale contained in the provisions of the contract.  A Deed of Trust has a trustee who is deemed to hold legal title to the real property to secure the repayment of money.  The trustee can then sell the property without the need to go through a judicial foreclosure if repayment is not made.  However, statutory (nonjudicial) foreclosure procedures must be followed.

Under current Arkansas Law, all mortgages will now automatically have an "implied" power of sale in the terms of the mortgage.