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What is a Mortgage Lien? Research Team | Posted On Thursday, June 13,2019, 12:18 PM

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What is a Mortgage Lien?



A mortgage lien gives the bank safety as it has legal right on the property, if the loan turns bad. It gives the bank a claim on the property, until the debt is fully repaid. In other words, a mortgage lien is a legal claim imposed against a mortgaged property, which could be a house or a property. A mortgage balance, also known as lien portion, is the actual amount you owe to the bank when you have mortgaged your property. You have to repay the amount left on a mortgage lien, in case of sale of the property, prior to the distribution of any profits.

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What is a Mortgage Lien?

Categories of Liens

  1. Voluntary Liens: A voluntary lien occurs when you agree to pay the earnings on the property to your bank. It is created to serve as a security for loans. These liens encourage banks to lend money with an element of security.
  2. Statutory Liens: Country or states create statutory laws that are categorized as tax lien, landlord’s line, vendor’s lien, warehouseman’s lien, mechanic’s lien, and so on.
  3. Judicial Liens: Judicial liens are created by judicial laws. Sometimes, state or country laws form the basis for judicial liens.

Benefits of Mortgage Liens for Creditors:

Creditors have the legal right to seize a property when a borrower goes insolvent or defaults on repayments. Creditors use liens as public records. The existing liens are brought to the attention of potential creditors. One cannot sell a property unless a lien is removed from that property. Mortgage liens are a commonly used tool to safeguard against delayed payments.

How Can Liens Be Removed?

When liens are legitimate, you have to clear the outstanding dues to remove a lien on your property. They are removed when you sell a house property or refinance your automobile. If you don’t have enough funds to pay off an existing debt, speak to your lender and check if they are willing to offer you a settlement.

Foreclosure of Mortgage Lien

Lenders follow a legal process called foreclosure to seize a property based on terms and conditions of the contract. Foreclosure is initiated when payments are delayed for several months. It may happen under the following circumstances:

1) At the time of sale of a property

2) When a lender is unable to recover the dues.

How to Find Out if There is a Lien On a Property?

Mortgage liens are public records that can be accessible using the name of the property owner and the address of the property. If do not get the data online, approach the title company directly. Title representatives can be of great help in this case.

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