Mortgagor vs. mortgagee: What’s the difference?

When you take out a mortgage, you might encounter unfamiliar words and terms, including “mortgagor” and “mortgagee.” Here’s what those mean and how they apply to you as the borrower.

Who is the mortgagee?

The mortgagee is the lender originating and providing funds for mortgages, whether to help a borrower buy a home or refinance to a new loan. The lender or mortgagee could be a bank, credit union or other financial institution that offers mortgages.

You might come across the term “mortgagee” in your loan documents and your homeowners insurance policy, specifically in the mortgagee clause.

As the mortgagee, the lender determines whether the borrower qualifies for a loan and, if so, how much to offer and at what rate.

While some lenders or mortgagees oversee loan repayments — a responsibility known as servicing — many transfer that job to a loan servicing company. When this happens, the lender, not the servicing company, is still considered the mortgagee.

What is a mortgagor?

A mortgagor is simply another word for borrower.

“The mortgagor is the person, couple or group of people seeking a loan to purchase a home — also known as the buyer, borrower or homeowner,” says Rob Heck, senior vice president of Mortgage at Morty, a New York City-based online mortgage broker.

The mortgagor is responsible for:

• Repaying the loan on time as stipulated in the closing documents
• Paying homeowners insurance, property taxes and any other required payments, such as mortgage insurance
• Maintaining the home and property
• Communicating with the mortgagee if payment trouble arises

Mortgagee vs. mortgagor protections and rights

A mortgage includes various rights and protections for the borrower or mortgagor. These protections include basic rights like the right to renovate the home, as well as other protections like the right of redemption, or the right for a borrower to bring their loan current to prevent foreclosure.

In addition, the lender or mortgagee benefits from some protections. This includes the right to foreclose in the event the borrower stops making payments.