HISTORY OF MORTGAGE The word "mortgage" comes from both the Old French ("mort") and English ("gage") meaning "dead pledge." In the late 12th century, the first mortgages were recorded in England. One would borrow money to buy property if they could not afford it. If they did not pay up, the creditorwould take the real estate and the property ownership would be dead to them. On the flip side, ifa debtor paid off the loan, the debt would be extinguished and therefore dead in that respect. This system was brought to America with the pilgrims and as people bought property they would take out a loan from a local bank. In those days, the banks were smart and the buyer had to put down 50% of the purchase price and pay back the loan over a shorter period of time. Property ownership was nationwide come the early 1900's when the depression hit. The government, the people and the banks all went belly up and it was foreclosure city! When Roosevelt became president, he created the FHA (Federal Housing Administration) to insure banks in case of mortgage default. This made lenders more apt to lend to people and not worry about foreclosure. However, the lending system was more local and each area had its own economy and based rates and lending on that. MORTGAGE Mortgage is a security interest in real property, held by lender as a security for debit. To be more specific, It is a transfer of interest in land from the owner, to the mortgage lender on the condition that this interest will be returned to the owner when the terms of mortgage had been satisfied or performed, as such, is a security for the loan that the lender makes to the b orrower. The transferor is called “mortgager”, a transferee is calleda “mortgage”, the principle money loan is called mortgage money”, and the instrument by which the transfer is effected is called “mortgage deed”. PARTIES & TERMS INVOLVED MORTGAGE: A temporary loan secured (or money borrowed) from a creditor by keeping one's (owned) valuable property (e.g. House, Land, etc) as a mortgage security in order to give creditoran assurance for the repayment of debt within fixed time period. MORTGAGOR: The transferor or the one who makes/gives the mortgage is called a mortgagor. MORTGAGEE: The transferee or the one to whom mortgage is given or the one who takes/accepts the mortgage is called a mortgagee.
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HISTORY OF MORTGAGEThe word "mortgage" comes from both the Old French ("mort") and English ("gage") meaning
"dead pledge." In the late 12th century, the first mortgages were recorded in England. One would
borrow money to buy property if they could not afford it. If they did not pay up, the creditor
would take the real estate and the property ownership would be dead to them. On the flip side, if
a debtor paid off the loan, the debt would be extinguished and therefore dead in that respect.
This system was brought to America with the pilgrims and as people bought property they would
take out a loan from a local bank. In those days, the banks were smart and the buyer had to put
down 50% of the purchase price and pay back the loan over a shorter period of time. Property
ownership was nationwide come the early 1900's when the depression hit. The government, the
people and the banks all went belly up and it was foreclosure city!
When Roosevelt became president, he created the FHA (Federal Housing Administration) to
insure banks in case of mortgage default. This made lenders more apt to lend to people and not
worry about foreclosure. However, the lending system was more local and each area had its own
economy and based rates and lending on that.
MORTGAGEMortgage is a security interest in real property, held by lender as a security for debit. To be more
specific, It is a transfer of interest in land from the owner, to the mortgage lender on thecondition that this interest will be returned to the owner when the terms of mortgage had been
satisfied or performed, as such, is a security for the loan that the lender makes to the borrower.
The transferor is called “mortgager”, a transferee is called a “mortgage”, the principle money
loan is called mortgage money”, and the instrument by which the transfer is effected is called
“mortgage deed”.
PARTIES & TERMS INVOLVED
MORTGAGE: A temporary loan secured (or money borrowed) from a creditor by keeping one's
(owned) valuable property (e.g. House, Land, etc) as a mortgage security in order to give creditor
an assurance for the repayment of debt within fixed time period.
MORTGAGOR : The transferor or the one who makes/gives the mortgage is called a mortgagor.
MORTGAGEE: The transferee or the one to whom mortgage is given or the one who
CONSIDERATION: The consideration of a mortgage may be either:-
The performance of a contract giving rise to a pecuniary liability, Money advanced or to be
advanced by way of loan, or an existing or future debt.
TRANSFER OF AN INTEREST: According to the definition given above the third requisite of
mortgage is that there should be a "transfer of an interest" of an immovable property for the purpose of securing the payment of money advanced by way of loan or for the purpose of
securing the performance.
The words "transfer of interest" signifies that the interest which passes to the mortgage is not
ownership or dominion, which notwithstanding the mortgage, resides in the mortgagor. This
right is only an accessory right which is intended merely to secure the due payment of the debt.
In mortgage, there is a transfer of a partial interest.
PARTIES: The person who transfers an interest in the property is called the mortgagor; the
person to whom the interest is transferred is called the mortgagee. The mortgagor must be
competent to transfer. Thus a minor cannot be a mortgagor but a minor can be a mortgagee.
Parties & their Capacities
RIGHTS OF THE MORTGAGOR
THE R IGHT OF R EDEMPTION: or simply, 'The Right of Redemption'. The mortgagor is
supposed to be the natural owner of the property and hence it is accepted that his interests in the
property are always supposed to be natural. His rights are supposed to be statutory and legal for
which legal remedies are available for him to establish his rights at the end.
R E-TRANSFER CASE: He being, the natural owner of the property has the inherent right to re-
transfer his property to anybody else irrespective of the person in whose favor he has firstlytransferred the property for the sake of money.
R IGHT TO GRANT LEASE: It should also be not treated that after mortgaging the property the
mortgagor is not free to lease the property to any of the lease. We have noted that mortgage
implied the temporary charge over the immovable property belonging to the mortgagor till the
money taken is repaid to the mortgagor. It is, therefore, the inherent right of the mortgager to
make the lease of the property whenever he desires for any purpose. Each such lease is supposed
to be binding on the mortgagee.
R IGHT OF INSPECTION OF THE PROPERTY: Since the mortgager is the natural owner of
the property it is supposed to be his inherent right to inspect the property at any time and as and
when he desires. It is his right to ascertain whether the property mortgaged is maintained
properly or not and hence this right has been conferred on by the law itself. He can also ask for
the documents of the property and is also eligible to get the copies of the documents.
R IGHT OF R EASONABLE WASTAGES: The right of reasonable wastages is also guaranteed
by the law but it is to be noted that such of the wastages are minimum and reasonable and does
THROUGH COURIER Subject: First Demand Notice for the Payment of Mortgage Money under Section 15(2) of the Financial
Institutions (Recovery of Finances) Ordinance, 2001.
Dear Sir/Madam,
We have been instructed by our client i.e The Bank Of Punjab, having its Head Office, at Lahore and a Branch amongst
others known as _________ Branch, (hereinafter referred to as ‘ The Bank’) hereby serve upon you notice under Section
15(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for demanding the mortgaged money.
At your guarantee/mortgage, the Bank sanctioned a running finance facility (hereinafter referred to as “TheFinance”) to
M/s. __________________, through its Proprietor namely Mr. _______________, by way of agreement for financing
dated ___________, having its office at _____________________, (hereinafter referred to as the “Customer’).
In consideration and in pursuance of the above, you with intent to create mortgage had executed Memorandum of
Deposit of Title Deed and also Registered Mortgage Deed in favor of the Bank, with regard to the Property/Residential
House, measuring _______________________________________, to secure the amounts due towards the Customer.
The above Customer availed the said finance facility, however, failed to repay the due amount to the Bank. TheCustomer was reminded time and again to discharge its/their outstanding financial obligations but all efforts in this
regard failed and the Customer ignored/neglected to discharge and liquidate the financial obligation(s) under the
agreement, commitments, promises, and undertakings executed by the Customer in this behalf.That Section 15 of the
Financial Institutions (Recovery of Finances) Ordinance, 2001, empowers the Bank to sell the mortgaged property
without the intervention of the Court. In pursuance thereof, you are called upon to pay the due amount of
Rs._____________/- (Rupees ___________________only) as on ____________ along with all costs, charges and mark-
up within 14 days from the receipt of this notice, failing which, the Bank shall proceed in accordance with Section 15 of
the Ordinance to sell mortgaged property by public auction and recover its outstanding amounts.
Please be informed that by virtue of Section 15(3), upon service of this First Notice, all the powers of the Mortgagor and
benefits and/or profits from mortgaged property shall transferred to BOP, until this notice is withdrawn.
Since, the Customer has defaulted in discharge of his liabilities and has not given positive response and willfully
neglected/refused to pay the amounts which continues to remain outstanding, hence this notice.
Thatthe Bank hereby call upon you, to pay the outstanding amount of
Rs.__________/- (Rupees________________________________________ only) as on _______________ along with allPRESENT AND FUTURE costs, charges and mark-up within Fourteen (14) days from the date of receipt of this notice,
failing which the Bank shall be constrained to initiate the proceedings under Section 15 of the Financial Institutions
(Recovery of Finances) Ordinance, 2001 for sale of mortgaged property at your own risk and costs.
A copy of this notice is being retained in our office for future reference and record.
2.SECOND NOTICE FOR 14 DAYS.2. SECOND DEMAND NOTICE
Ref: ______________ Dated:____________
MR. ___________________
______________________
THROUGH COURIER
Subject: Second Demand Notice for the Payment of Mortgage Money under Section 15(2) of the Financial
Institutions (Recovery of Finances) Ordinance, 2001.
Dear Sir/Madam,
Reference Notice Under section 15 of the Financial Institutions (Recovery of Finances) Ordinance dated 16 March 2010,
served upon you. We have been instructed by our client i.e The Bank Of Punjab, having its Head Office at BOP Tower, 10-
B, Block E-II, Main Boulevard, Gulberg-III, Lahore and a branch amongst others known as __________, (hereinafter
referred to as (‘The Bank’) hereby serve upon you second notice under Section 15(2) of the Financial Institutions
(Recovery of Finances) Ordinance, 2001 for demanding the mortgaged money.At your guarantee/mortgage, the Bank sanctioned a running finance facility (hereinafter referred to as “TheFinance”) to
M/s. __________________, through its Proprietor namely Mr. _________________, by way of agreement for financing
dated ________________, having its office at ___________________________________________, (hereinafter referred
to as the “Customer’).
In consideration and in pursuance of the above, you with intent to create mortgage had executed Memorandum of
Deposit of Title Deed and also Registered Mortgage Deed in favor of the Bank, with regard to the Property/Residential
House, measuring _______________________________________, to secure the amounts due towards the Customer.
The above Customer availed the said finance facility, however, failed to repay the due amount to the Bank. The
Customer was reminded time and again to discharge its/their outstanding financial obligations but all efforts in this
regard failed and the Customer ignored/neglected to discharge and liquidate the financial obligation(s) under the
agreement, commitments, promises, and undertakings executed by the Customer in this behalf.
That Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, empowers the Bank to sell the
mortgaged property without the intervention of the Court. In pursuance thereof, you are called upon to pay the dueamount of Rs.___________/- (Rupees ______________________only) as on 29.03.2010 along with all costs, charges
and mark-up within 14 days from the receipt of this notice, failing which, the Bank shall proceed in accordance with
Section 15 of the Ordinance to sell mortgaged property by public auction and recover its outstanding amounts.
Please be informed that by virtue of Section 15(3), upon service of this Second Notice, all the powers of the Mortgagor
and benefits and/or profits from mortgaged property shall be transferred to BOP, until this notice is withdrawn.
Since, the Customer has defaulted in discharge of his liabilities and has not given positive response and willfully
neglected/refused to pay the amounts which continues to remain outstanding, hence this notice.
Thatthe Bank hereby once again call upon you, to pay the outstanding amount of Rs.__________________/- (Rupees
_________________________________only) as on __________ along with all PRESENT AND FUTURE costs, charges and
mark-up within Fourteen (14) days from the date of receipt of this notice, failing which the Bank shall be constrained to
initiate the proceedings under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for sale of
mortgaged property at your own risk and costs.
A copy of this notice is being retained in our office for future reference and record.
Yours truly,
Sd/-
ATTORNEY-AT-LAW
Copy to:
The Manager, _______________________ Branch.
The Head, SAM (Commercial) Division. ATTORNEY-AT-LAW
3.IF CONTINUOUS TO DEFAULT IN PAYMENT THAN FINAL NOTICE TO BE SERVED
FOR 30 DAYS
3. FINAL DEMAND NOTICE
Ref: ______________ Dated:____________
MR. ___________________
______________________
THROUGH COURIER
Subject: Final Demand Notice for the Payment of Mortgage Money under Section 15(2) of the Financial
Institutions (Recovery of Finances) Ordinance, 2001.
Dear Sir/Madam,
Reference Notice Under section 15 of the Financial Institutions (Recovery of Finances) Ordinance dated 16 March 2010,
served upon you. We have been instructed by our client i.e The Bank Of Punjab, having its Head Office at BOP Tower, 10-
B, Block E-II, Main Boulevard, Gulberg-III, Lahore and a branch amongst others known as ____________ Branch,
(hereinafter referred to as (‘The Bank’) hereby serve upon you Final Notice under Section 15(2) of the Financial
Institutions (Recovery of Finances) Ordinance, 2001 for demanding the mortgaged money.At your guarantee/mortgage, the Bank sanctioned a running finance facility (hereinafter referred to as “TheFinance”) to
M/s. ________________, through its Proprietor namely Mr. ____________, by way of agreement for financing dated
________________, having its office at __________________, (hereinafter referred to as the “Customer’).
In consideration and in pursuance of the above, you with intent to create mortgage had executed Memorandum of
Deposit of Title Deed and also Registered Mortgage Deed in favor of the Bank, with regard to the Property/Residential
House, measuring _______________________________________, to secure the amounts due towards the Customer.
The above Customer availed the said finance facility, however, failed to repay the due amount to the Bank. The
Customer was reminded time and again to discharge its/their outstanding financial obligations but all efforts in this
regard failed and the Customer ignored/neglected to discharge and liquidate the financial obligation(s) under the
agreement, commitments, promises, and undertakings executed by the Customer in this behalf.
That Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, empowers the Bank to sell the
mortgaged property without the intervention of the Court. In pursuance thereof, you are called upon to pay the due
amount of Rs.___________/- (Rupees ______________________only) as on _____________ along with all costs,charges and mark-up within 30 days from the receipt of this final notice, failing which, the Bank shall proceed in
accordance with Section 15 of the Ordinance to sell mortgaged property by public auction and recover its outstanding
amounts.
Please be informed that by virtue of Section 15(3), upon service of this Final Notice, all the powers of the Mortgagor and
benefits and/or profits from mortgaged property shall be transferred to BOP, until this notice is withdrawn.
Since, the Customer has defaulted in discharge of his liabilities and has not given positive response and willfully
neglected/refused to pay the amounts which continues to remain outstanding, hence this notice.
Thatthe Bank hereby once again call upon you, to pay the outstanding amount of Rs.____________/- (Rupees
______________________________ only) as on ____________ along with all PRESENT AND FUTURE costs, charges and
mark-up within Thirty (30) days from the date of receipt of this final notice, failing which the Bank shall be constrained
to initiate the proceedings under Section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 for sale
of mortgaged property at your own risk and costs.
A copy of this notice is being retained in our office for future reference and record.
CONCLUSIONMortgage in basically use to help in home financing and for that purpose any immovable
property will be plugged and loan will be provided according to the value of that immovable
property. Different kinds of mortgages are used for financing. Rates are different it might be
fixed, floating or both. Different types of forms are used for home financing. If borrower isdefault in paying back the loan bank or any other institution that provide loans will arrange
auction and sell that property after 3 notices and get their money back.