What Are Mortgage Servicing Rights?

Mortgage is a legal agreement that protects the lender of money when the borrower cannot pay the amount required by the bond or bill. The mortgage gives the lender the right to obtain repayment from the cash generated from the sale of the assets of the lender of borrowers identified in the agreement. In a legal document called a mortgage con-tract, lenders and lenders set out various mortgage terms. ^[1]

Mortgage

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(1) The mortgage right belongs to the security right (Pledge). Mortgage right is a kind of real right set for the exchange value of property. It is essentially a value right. Its purpose is to guarantee the exchange value of the property.

As a security right, mortgage is the most ideal and widely used form of security in practice because it has the most reliable security effect and can fully play the role of the secured property. Since the mortgage does not transfer its possession, it The guarantee value can be brought into play, or the owner can continue to use and exert its use value, and the income obtained can also be used to pay off debts, so that the rights of creditors can be fully protected. Based on the advantages of mortgage rights that are different from other security rights,

Because of the nature of the mortgage, which does not transfer the possession of the mortgaged property, the mortgage is a form of security that plays an important role in economic activities and in law.

First, the mortgage ratio

According to Chinese law, the realization of mortgage rights must meet the following four conditions:

The mortgage right must exist effectively. If the mortgage right is invalid or has been revoked, it cannot be realized.

The debtor's performance period must expire. Whether the debtor's time limit for fulfilling the debt expires is the time standard for determining whether the debtor fulfills the debt.

The creditors were not cleared. When the debt performance period expires, the creditor has not been paid off, indicating that the debtor has not fulfilled its obligations on schedule. Whether the debt is delayed or refused to be performed, the creditor can exercise the mortgage right so that the creditor's right is paid off.

The debt has not been paid off due to creditors. Only when the debtor fails to settle the debt due to the reasons of the debtor, the mortgagee can exercise the mortgage right. If the creditor's failure to pay is due to his own reasons, the mortgagee cannot exercise the mortgage.

The types of mortgage rights can be divided differently according to different standards. According to the relevant provisions of China's "Guarantee Law", there are mainly the following types of mortgage rights:

(One)

Also known as the order, order, or order of the mortgage. Refers to the order of priority of each mortgagee's priority when setting up several mortgages on the same mortgage, that is, the relationship between several mortgages on the same mortgage. The order of the mortgage rights is the relationship between the mortgagors and the important performance of the realization of the exclusive effect of the mortgage rights. It is also one of the important issues in the mortgage system.

The mortgagee may waive the mortgage right or the order of the mortgage right. The mortgagee and the mortgagor may agree to change the mortgage order and the amount of the secured creditor's rights, but the change of the mortgage right shall not adversely affect other mortgagees without the written consent of the other mortgagee.

It is mainly manifested in the following two points:
First, when the mortgaged property is illegally infringed by others, the mortgagee has the right to request the removal of the obstruction.
Second, if the mortgagor does not agree with the mortgagee, if the mortgaged property is transferred to another person without authorization, the mortgagee is not affected, and the mortgagee still has to pursue the mortgaged right against the mortgaged property. The first paragraph of Article 49 of China's "Guarantee Law" stipulates: "If the mortgagor transfers the registered collateral during the mortgage period, the mortgagor shall notify the mortgagor and inform the assignee that the transferred property has been mortgaged. The mortgagor has not notified the mortgage. If the right holder or the transferee is not notified, the transfer is invalid. "Is this invalid absolutely or relatively invalid? Can the court take the initiative to confirm the invalidity? We believe that the invalidity here is absolutely invalid. Therefore, only when the mortgagee or the assignee claims, the people's court can confirm that the act is invalid according to law.

In order to fully protect your legal rights and interests, please read the following carefully before completing the registration form.

1. The applicant must use a standard A4 paper, black pen or signature pen to complete the registration form.

2. The applicant shall ensure that the materials and information provided by it are true and valid. The contents of the registration shall be in accordance with the mortgage contract and

Article 196 of the Property Law: If the debtor fails to perform the debt due or the mortgage agreement is reached, the mortgagee may agree with the mortgagor to discount the mortgaged property or to auction or sell the mortgaged property to receive priority payment. If the agreement harms the interests of other creditors, other creditors may request the people's court to cancel the agreement within one year from the date when they know or should know the reason for the cancellation. If the mortgagee and the mortgagor have not reached an agreement on the realization of the mortgage, the mortgagee may request the people's court to auction or sell the mortgaged property. Where the mortgaged property is discounted or sold, reference shall be made to the market price. Article 196: Where a mortgage is established in accordance with the provisions of Article 181 of this Law, the mortgaged property shall be determined when one of the following situations occurs:

(1) the debt performance period has expired and the claims have not been realized;

(2) the mortgagor is declared bankrupt or cancelled;

(3) the circumstances agreed by the parties to realize the mortgage right;

(4) Other situations that seriously affect the realization of claims.

Article 198: After the mortgaged property is discounted, auctioned, or sold off, the portion of the price that exceeds the amount of the creditor's right shall be owned by the mortgagor, and the remaining portion shall be settled by the debtor.

[Related Provisions] Article 56 of the Security Law: The mortgagee has the priority to receive the payment of the land use right transfer price equivalent to the amount of land use right transfer payment due in accordance with the law. "Interpretation of the Security Law" Article 74: If the parties have not agreed on the proceeds from the discount of the mortgaged property or the auction or sale, the payment shall be made in the following order:

(1) the cost of realizing the mortgage;

(2) interest on the principal claim;

(3) The main creditor's right.

Article 75: Where there are two or more mortgagors of the same creditor's right, and the creditor waives the mortgage guarantee provided by the debtor, other mortgagors may request the people's court to reduce or exempt them from their guarantee responsibilities. Where there are more than two mortgagors of the same creditor's right, the parties have not agreed on the share or order of the creditor's rights secured by the mortgaged property or the agreement is unknown. The mortgagee may exercise the mortgage on any one or each property. After the mortgagor assumes the liability for guarantee, it can recover the debtor's debt, or it can require other mortgagors to pay off their share. Generally speaking, the realization of the mortgage right should generally meet the following four conditions: First, the mortgage right exists legally and effectively. Second, the creditor's rights guaranteed by the mortgage have reached the redemption period. However, in accordance with the provisions of Article 196 of the Property Rights Law, when the mortgagor is declared bankrupted or cancelled, the parties agreed to realize the mortgage right, and other situations that seriously affect the realization of the creditor's rights, such as the value of the mortgaged property due to the mortgagor's reduction in value Under special circumstances where the mortgagor cannot restore the original condition or increase the guarantee, the mortgagee can realize the mortgage right even if the debt has not expired. Third, the debtor has not paid off the debt, including not all the debt has been paid off, and some debts have not been paid off, because according to the principle of inseparability of the mortgage, although the debtor only has part of the debt outstanding, the mortgagee can still claim all the collateral. Realize mortgage. Fourth, the unliquidated debt is not caused by creditor's reasons. If the debtor's failure to perform the debt is caused by a party of the creditor, the mortgagee shall not realize its mortgage. For example, creditors refuse to accept the debtor's full and proper performance. There are three main methods for realizing mortgage rights, namely auction, sale, and discount. In practice, the specific method of realizing the mortgage right is first determined by the parties through negotiation. Such an agreement can be implemented when the mortgage contract is concluded, or after the mortgage contract is entered into. If the two parties fail to reach an agreement, the mortgagee may sue to the people's court, and the people's court will decide how to realize the mortgage. The following three methods are specifically analyzed:

(1) Auctions Because auctions can make the price of collateral public and fair, which not only protects the realization of creditor's rights to the greatest extent, but also protects the interests of mortgagors, auctions in various countries have adopted auctions as the most basic way to realize mortgages. The auction consists of an arbitrary auction and a compulsory auction. The former is voluntarily commissioned by the parties to auction, and the latter is a mortgagee applying for court auction. Regarding the procedures and effects of auctions, the relevant provisions of the Auction Law and the Civil Procedure Law shall apply.

(2) Sell-off Sell-off is a simpler way to change the price of the subject matter, that is, the parties or the court directly sell the mortgaged property at a fair and reasonable price, and use the proceeds to preferentially repay its secured mortgage right. . However, it should be noted that in judicial practice, auctions are generally used as the principle, and liquidation only exists in exceptional forms.

(3) Discounts and discounts means that the debtor fails to perform its debts at the end of the performance period, and is judged after the agreement between the mortgagee and the mortgagor, or when the agreement is tried by the people's court, according to the quality of the mortgaged property and reference to the market price. Mortgage ownership is transferred from the mortgagor to the mortgagee, so as to realize the mortgage right.

In short, discounting collateral means obtaining ownership of the collateral in the form of an agreement. Although this method is simple in procedure, it is not transparent enough, so there are many restrictions on legislation, the most important of which is the prohibition of "liquidity contract" by the county. The so-called liquidity contract, also known as a liquidation contract, a liquidation contract, or a prepayment mortgage payment contract, refers to the parties to the security in the contract setting mortgage or pledge right or before the debt performance period expires, The term of the collateral shall be owned by the creditor when it is not paid within the period. The fundamental reason for the prohibition of "liquidity contract" is that when the value of the collateral is higher than the amount of the creditor's rights or the value of the collateral will increase in the future, the excess will not be returned to the guarantor. The interests of the guarantor or other creditors will be damaged; After the devaluation occurs and the two parties no longer seek compensation, the interests of the security holder will be lost. It can be seen that the above situations are unfair. In particular, debtors are often economically weak, while creditors are usually in a superior position. Creditors may take advantage of the debtor's embarrassment to raise debts, forcing them to guarantee smaller claims with higher-value collateral, and hope that when the debtor is unable to repay the debt, he will obtain ownership of the collateral to obtain huge profits. therefore. Based on the principle of fairness and the concept of justice in civil law, in order to protect the interests of the debtor as a weak person and balance the rights and interests of all parties, most modern civil laws in all countries prohibit liquidity contracts. China's "Property Law" has clear prohibitive provisions on this. In addition to the above methods, in theory and practice, the mortgagee is generally allowed to negotiate with the mortgagor to realize the mortgage in other ways. One of the most meaningful ways is to refer to the Anglo-American law system to collect the interest by the mortgagee in possession of the collateral, or to realize the mortgage by escrow operation of the collateral. For example, some financial departments negotiate with the mortgagor to lease the mortgaged property or the bank uses the mortgaged property to pay off the loan with the rent. In the financing of foreign-related projects in China, because the collateral is mostly large power stations, highways, bridges, etc., it is difficult to change the price by auction. Therefore, it is generally recognized that foreign creditors have the right to take over the collateral and use the proceeds to settle the debt.