A secured mortgage refers to the situation when a borrower will put up the property or home as collateral for the mortgage loan. Therefore, the lender or financial institution that furnishes the loan will essentially own the deed to the property or home, being the legal owner until the borrower pays the secured mortgage in full.
A secured mortgage will then also, in turn, mean that in the case the borrower cannot pay the loans in prescribed manner or in full, the borrower will default on the loan. Such a situation would mean that the lender will then take full possession of the home or property.
This situation will usually result in the foreclosure of the home or property, where the lender or financial institution will then sell such assets in order to recover the full or partial amount of the loan. In some situations where the entire amount of the loan is not regained, the lender may sometimes be able to obtain a deficiency judgment against the original borrower to furnish the remaining amount.
Usually, a secured mortgage will also carry within its provisions an encumbrance. Encumbrance is a legal term that is used to describe a restriction or limit to which the lender has rights to the actual ownership of the property or home that is given as collateral for a mortgage. An encumbrance may also place limits on the borrower, placing restrictions on what can be done to the home, an example being home improvements and alterations.
