A mortgagee is the lender in a mortgage transaction, and a mortgagor is the borrower. If you take out a mortgage to buy a home, you're the mortgagor and the company lending you money is the mortgagee.
In the mortgagee vs. mortgagor relationship, the mortgagee lends and the mortgagor borrows. You'll see both terms in loan documents, property records and homeowners insurance policies.
Mortgagee vs. Mortgagor Basics
| Feature |
Mortgagee |
Mortgagor |
| Definition |
The lender or party holding the lender's interest in the mortgage |
The borrower who grants a security interest in property |
| Typical Party |
A bank, credit union, mortgage lender or loan holder |
A homebuyer or homeowner borrowing against property |
| Main Role |
Provides financing or holds the mortgage interest securing repayment |
Borrows money and pledges the property as collateral |
| Financial Obligation |
Has the right to receive repayment under the loan agreement |
Must repay the loan under the agreed terms |
| Interest in Property |
Holds a security interest associated with the mortgage |
Typically owns the property subject to the mortgage |
| Insurance Role |
Its financial interest may be protected through a mortgagee clause |
Typically maintains the required homeowners insurance coverage |
What Is a Mortgagee?
A mortgagee is the lender, or whichever party later holds the lender's interest under a mortgage. The lender funds your purchase. In exchange, you agree to repay the loan and give the lender a security interest in the property.
The mortgagee is usually a bank, credit union or mortgage company. It can transfer its interest to another party after closing.
For example, suppose you borrow $320,000 from a mortgage lender to purchase a $400,000 home.
- You contribute an $80,000 down payment.
- The lender provides the remaining $320,000.
- You agree to repay the mortgage according to the loan terms.
- The property secures the loan.
At origination, the lender is the mortgagee. It holds a security interest in your home, not ownership of it.
What Rights Does a Mortgagee Have?
The mortgagee's rights come from the loan documents and the law. They include:
- Receiving the payments owed on the loan.
- Keeping a security interest in the property until the debt is repaid.
- Requiring insurance on the property that serves as collateral.
- Enforcing the mortgage after a default, following required procedures.
- Transferring the mortgage interest to another party.
If you default, the mortgagee can eventually foreclose, but foreclosure is not automatic after one missed payment.
Federal servicing rules and state law set requirements first. Some states require a court proceeding, while others don't.
What Is a Mortgagor?
A mortgagor is the borrower who grants a security interest in property to secure a mortgage loan. In a home purchase, that's the buyer. Your obligations as mortgagor include:
- Making principal and interest payments.
- Paying property taxes and other required charges.
- Keeping homeowners insurance that meets the loan requirements.
- Maintaining the property in reasonable condition.
- Following the loan's rules on property transfers and additional liens.
Many lenders collect your taxes and insurance through an escrow account. If you and a co-buyer both sign the mortgage and promissory note, you are both mortgagors and jointly responsible for repayment.
A co-owner can also sign the mortgage without signing the note. That pledges the property without creating personal liability for the debt.
Does the Mortgagor Own the House?
Yes, in a typical residential mortgage. The mortgagor owns the property, subject to the lender's security interest.
Say you purchase a $400,000 home with an $80,000 down payment and a $320,000 mortgage. You take title at closing, and the lender holds a lien securing the $320,000 loan. As you pay down principal, your home equity grows, assuming the home's value holds.
Some states use traditional mortgages, while others use deeds of trust with different parties and terms. Rules vary by state, so check your state's requirements.
Where Do You See Mortgagee and Mortgagor on Mortgage Documents?
The terms show up in several documents you'll sign when you buy, finance and insure a home.
Mortgage or Deed of Trust
The mortgage, also called a security instrument, creates the lender's security interest. In traditional mortgage states, it names the mortgagee and mortgagor directly.
A deed of trust uses trustor, trustee and beneficiary instead. The trustor is the borrower, and the beneficiary is the lender or its successor. The CFPB's explanation of mortgage closing documents identifies the mortgage or deed of trust as the agreement that makes the property collateral for the loan.
The deed that transfers ownership to you uses another pair of terms, explained in grantor vs. grantee in real estate.
Promissory Note
The promissory note is your personal promise to repay, listing the borrower, original lender, loan amount, interest rate and repayment terms.
The note documents the debt, and the mortgage secures it with the property.
Closing Disclosure
Your Closing Disclosure lists the final loan terms, projected payments, closing costs and contact details for each party. The form says "Borrower" and "Lender," not "mortgagee" and "mortgagor."
For most mortgages, the lender must deliver it at least three business days before closing.
Homeowners Insurance Policy
Your homeowners policy names the mortgagee in a section called the mortgagee clause. It lists the lender's name and mailing address so the lender receives claim payments and policy notices.
What Is a Mortgagee Clause in Homeowners Insurance?
A mortgagee clause is a property insurance provision that protects the lender's financial interest in the insured home. Lenders require coverage because the home is their collateral, and you'll show it with an insurance binder before closing.
For example, suppose your home sustains $40,000 in covered storm damage. The insurer may make the check payable to both you and the mortgagee or mortgage servicer. The servicer can then release the money in stages as repairs are completed.
The clause does not make the lender the owner of your policy. You remain the named insured.
Why Is My Mortgage Lender Listed on My Insurance Policy?
Your lender is listed because the home secures the loan. The name in the clause may not match the lender that made your loan.
Fannie Mae's property insurance requirements, for example, specify when the mortgage servicer must be named in the mortgagee clause instead of the original lender. If your servicer changes, update the clause on your policy.
Mortgagee vs. Named Insured
These terms refer to different parties on an insurance policy.
| Insurance Term |
Meaning |
| Named Insured |
The person or entity identified as an insured party under the policy, typically the homeowner |
| Mortgagee |
The lender or other designated party whose mortgage interest is protected by the policy |
| Mortgagee Clause |
The policy provision recognizing the mortgagee's interest and establishing applicable protections |
Mortgagee vs. Mortgage Servicer: What's the Difference?
The mortgagee holds the loan. The mortgage servicer administers it. They can be the same company, but often aren't. Your servicer handles:
- Collecting monthly payments.
- Sending mortgage statements.
- Tracking principal and interest.
- Managing escrow for property taxes and insurance, including the yearly escrow analysis and shortage notices.
- Answering account and payment questions.
- Running mortgage assistance and loss mitigation.
You might get your mortgage from one bank while a separate company collects your payments on behalf of the loan's owner.
What Happens If Your Mortgage Is Sold?
Lenders often sell loans after closing. A sale doesn't change your interest rate, balance or repayment terms. Two kinds of changes can happen, together or separately:
- Loan ownership transfer: A new institution or investor acquires ownership of the mortgage loan.
- Servicing transfer: A different company becomes responsible for collecting payments and managing your mortgage account.
Under federal rules, a new owner must notify you within 30 days after the effective date of a covered ownership transfer. In a servicing transfer, both servicers must send notices, and payments mistakenly sent to the old servicer are protected for a period.
Your mortgage statement names your servicer, which can tell you who owns your loan.
Is a Mortgagee the Same as a Mortgage Broker?
No. A mortgage broker helps you find and arrange financing. The lender funds the loan and becomes the original mortgagee. Some companies act as both broker and lender, so the role depends on the transaction.
What Happens When a Mortgagor Pays Off the Mortgage?
When you pay off your mortgage through a final payment, early payoff or refinance, the lender must release its lien. The lien release is recorded in the public records as a satisfaction of mortgage, release of mortgage or reconveyance, depending on the state.
Other liens, such as a second mortgage or home equity line of credit, must be paid off separately.
The Bottom Line
The mortgagee is the lender, and the mortgagor is the borrower who pledges the home as collateral. Your original lender, current loan holder and servicer may be different companies. Check your closing documents, insurance policy and mortgage statement to see who does what.
Frequently Asked Questions
What Is a Mortgagee?
A mortgagee is the lender, or the party that holds the lender's interest in a mortgage, with the right to foreclose after a default.
What Is a Mortgagor?
A mortgagor is the borrower who grants a security interest in property to secure a mortgage loan. In a home purchase, that's the homeowner.
Who Is the Mortgagee and Who Is the Mortgagor?
The mortgagee is the lender, and the mortgagor is the borrower. For example, if you borrow $300,000 from a bank to purchase a house, the bank is the original mortgagee and you are the mortgagor.
Is the Mortgagee the Lender or Borrower?
The mortgagee is the lender, or whoever holds the loan after a transfer. The borrower is the mortgagor.
Is the Mortgagor the Homeowner?
Yes, in a typical residential mortgage, the mortgagor owns the home and pledges it as collateral.
Is the Mortgagee the Same as the Loan Servicer?
Not always. The mortgagee holds the loan, while the servicer collects payments and manages the account.
Why Is a Mortgagee Listed on My Homeowners Insurance?
The lender has a financial interest in the home securing your loan. The mortgagee clause protects that interest after a covered loss.
Can the Mortgagee Change After Closing?
Yes, loans are often sold, which changes who owns the loan but not your loan terms.
Does the Mortgagee Own Your House?
No, the mortgagee holds a security interest, and you keep ownership subject to it.
What Is the Difference Between a Mortgagee and a Beneficiary?
Mortgagee is the lender's title in a traditional mortgage. Beneficiary is the lender's title in a deed of trust, where the borrower is the trustor.
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