No one gets hurt when you execute a mortgage -- unless you count paper cuts. The term "execution of a mortgage" simply refers to signing the document at what's commonly referred to as the "closing" of the sale. Given that a mortgage is usually part of a lengthy and complicated package of legal documents relating to a home loan, the execution process frequently involves more than a simple signature.
A mortgage isn't a loan. It's a legal document that gives your lender the right to take your property without your permission if you don't make your loan payments. When you execute it, which is a legal term that means "sign," you formally hand that right to your lender. Mortgages are long and complicated -- Fannie Mae's form for New York has 20 pages, and the Louisiana mortgage form has 18.
Simply signing a mortgage usually isn't enough to make it binding. Anyone could forge your signature. With this in mind, many states and lenders require you to have your signature notarized. When you sign the document, a notary watches you do it and verifies your identity, usually by reviewing an ID. The notary then certifies that the signature is yours and stamps the document with his seal.
Your lender will also take the notarized executed mortgage to your county's recorder. The recorder will store a copy of the document and enter it into the public record. This establishes the mortgage as an official and binding document. This does more than just give the mortgage force. It also means that if someone goes after your house with a lien or somesuch, their claim will come after the lender's because courts judge claims against property in the order in which they're recorded.
When you execute your mortgage, you usually execute some other documents. The mortgage note or promissory note contains the details of your loan and your promise to pay. It's what the mortgage secures. You will also sign settlement statements that show where the money is going, and you may also have to sign documents to give the title company permission to close your transaction for you and record the documents.
Mortgage or Trust Deed
Some states use trust deeds instead of mortgages. The process of executing a trust deed is the same, and the document's purpose and effect are the same. Trust deeds work a little bit differently from mortgages, though. In a trust deed, you don't give the lender a direct interest in your house. Instead, the interest sits with a third party that will give the ownership to the lender if you don't make your loan payments.
- FannieMae: Standard Mortgage - Louisiana
- FannieMae: Standard Mortgage - New York
- Allegheny County Pennsylvania: Recording Requirements
- James W. Martin, PA Attorney at Law: Article -- Execution of Florida Legal Documents: The Requirements for Recording and Notarizing Documents in Florida
- Nolo: What Happens to Judgment Liens During Foreclosure?
- Mortgage News Daily: Deed of Trust vs. Mortgage
- Realtor.com: Understanding the Closing Process
- Stockbyte/Stockbyte/Getty Images
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