Haiti-News : Des citoyens haïtiens continuent d’exiger la libération de Rigaud Ernest

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Mortgage Interest and Loans

This interest can take one of two forms based on the legal theory that prevails in the underlying jurisdiction. The lender can either own the property outright (but still allow the borrower to occupy the property as if they owned it), or the lender can place a “mortgage lien” on the property. States where lenders possess the title to the property are known as “title theory” states, and states where lenders place mortgage liens on property in lieu of taking title to it are known as “lien theory” states.

Title Theory

In title theory states, a lender holds the actual legal title to a piece of real estate for the life of the loan while the borrower/mortgagor holds the equitable title. When the sale of the real estate goes through, the seller actually transfers the property to the lender, who then grants equitable title to the borrower. This means that the borrower can occupy and use the property, but the lender has legal ownership over it.

In title theory states, a lender can simply step in and take possession of the property if a borrower defaults on the loan. Since the lender already technically owns the property, the lender simply revokes the borrower’s equitable title and reclaims the property.