Are you a mortgagor or mortgagor?
It’s 2025 and it’s time for some new mortgage questions and answers! Today’s question: “What is a lien holder?”
No, it’s not a typo. I didn’t leave an extra “e” on the word mortgage by mistake, even though it might look that way.
I may have also needed to ignore the “misspelling” when doing the spell check for this article.
Despite its similar appearance, it is actually a completely different word, somehow, just with the mere addition of the letter E.
Don’t ask me how or why, I don’t claim to be an expert on word origins.
It does seem like a good way to confuse a lot of people, though, and it’s probably been successful in that department for years now.
You can blame the British English language for that, or maybe American English.
Anyway, let’s stop looking up the English language and define the damn thing, shall we.
What is a lien holder?
A “mortgagor” (two E’s!) is the entity that originates (does) and sometimes holds the mortgage, also known as the bank or mortgage lender.
They lend money so people like you and I can buy real estate without draining our bank accounts.
It could also be your lender, the entity that sends you a mortgage bill each month, and perhaps an escrow analysis each year if your loan has a deposit.
The mortgagor extends financing to the “mortgagor,” who is the homeowner or borrower in the transaction.
So if you are reading this and you are not a bank, you are the mortgagor. It’s that simple.
Another way to remember this rather confusing word jumble; Who is the mortgagee? Not me!!
Sorry, that’s the best I could come up with. It’s actually quite memorable…
Mortgagor rhymes with borrower, sort of
- Here’s a handy way to remember the word pawner
- It rhymes a bit with the word borrower … or home owner
- Which is what you are if you have a mortgage on your property
I was trying to think of a good association so homeowners can remember which one they are instead of having to look it up every time they come across the word.
I think I came up with a semi-decent one, not great. Pawnbroker rhymes with borrower, sort of. Right? Not really, but they look and feel the same, right?
In any case, the real estate (real estate) provides security for the mortgage loan, and the mortgagor obtains a security right in return for providing financing (a home loan) to the mortgagor.
Yes, you still own the home if it has a mortgage on it, but the lender has the right to foreclose if you don’t keep your end of the bargain.
If the mortgagor fails to pay their mortgage as agreed, the mortgagee has the right to take possession of the property in question, typically through a process we’ve all at least heard of called foreclosure.
Assuming that happens, the property may ultimately be sold by the mortgage lender to a third party to pay off any associated liens or mortgages.
So if you’re still not sure, you’re probably the mortgagor, also known as the homeowner with a mortgage. And your lender is the mortgagee. Yippee!
What makes this particular issue even more confusing is that the reverse is true when it comes to related words like tenants and landlords.
Yes, for some reason a landlord is known as a “landlord” whereas the lessee/lessee is known as the “tenant”. In other words, it is the exact opposite for tenants than it is for homeowners.
But I suppose it makes sense that both landlord and mortgagee are property owners.
What about a lien clause?
- An important document you may come across when shopping for home insurance
- Indicates who the lender (mortgagor) is in the event of damage to the property in question
- Protects the lender’s interests if/when an insurance claim is made
- As they are often the majority owner of the property
You may also have heard the term “mortgagor clause” when going through the home loan process.
It refers to a document that protects the lender’s interest in the property in the event of damage or loss.
It contains important information about the mortgagor/lender, including name, address, etc. so the homeowner’s insurance company knows exactly who has ownership in the event of a claim.
Remember, while you’re technically a homeowner, the bank likely still has some exposure to your property if you put down a small down payment.
If, for example, you come in with just a 3% down payment, and the bank gives you a mortgage for 97% of the home’s value, they are quite a bit more exposed than you are.
This is why hazard insurance is required when you take out a mortgage to protect the lender if something bad happens to the property.
Conversely, if you’re buying a home in cash, as opposed to taking advantage of the low home loan rates on offer, it’s your choice whether to insure it or not.
But more than likely you will have insurance coverage on your property regardless.
In summary:
Mortgagee: The bank or mortgage credit institution
Pledger: The borrower/homeowner (probably you!)
Before creating this site, I worked as an account manager for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to start writing about mortgages 18 years ago to help potential (and existing) homebuyers better navigate the home loan process. Follow me on Twitter for hot takes.
