What Is a Mortgage Security Instrument?

What Is a Mortgage Security Instrument?

What Is a Mortgage Security Instrument?

A mortgage security instrument is a mortgage deed that places property as collateral, according to BusinessDictionary. About.com notes that the mortgage security itself is not a loan but an instrument that is given to the lender in order to gain a stake in the property.

The Nest notes that a mortgage constitutes the security instrument in a title theory. Under a title theory, the title is transferred to the lender for mortgage deeds. A loan that is backed by property is held until the borrower repays the lender. If a person defaults on the loan, the lender must receive approval from the courts to foreclose on the property. About.com claims that the lender may sell the property to recover the loan.