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Mortgages

Mortgages. Dependencies. Investments in real estate need lended long term capital Long term loans need collateral ( mortgages ) Mortgages need a real estate market. Legal Requirements for a Mortgage System. Secure Ownership and a Real Estate Market

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Mortgages

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  1. Mortgages

  2. Dependencies • Investments in real estateneedlended long term capital • Long term loansneedcollateral (mortgages) • Mortgagesneed a real estate market

  3. Legal Requirements for a Mortgage System • Secure Ownership and a Real Estate Market • Land Register, reliable and accessible • Clear legal description of mortgage contracts, standardization • Executionary sales

  4. Secure Ownership • The Creditor (mortgagee) cannothave a stronger position than the owner • Flaws in ownershipwillalsohurt the creditor • The creditor must be abletodetectflaws

  5. Basic Elements of Ownership Protection • Enforced acquisitions supported by law and with compensation • Prescription -- a balance between the active and the passive • Bona fide acquisitions -- regulating unregistered claims • Protection of leases to land, when buildings are mortgaged

  6. Land Registration • Transparent information • National system • Local input • The aim is external use • Computerisation • Different registers possible, but the presentation should be complete

  7. Public Access to Registers • Free access or professional purpose • Costfree or charged • Documents or computerized information • Protection of integrity • Government monopoly or private improvements

  8. Standardization and the Market • Credits for housing dominate the market • The cost for credit procedures should be kept low • Standard credit agreements necessary if rating of collaterals shall be possible

  9. Mortgages in Sweden Land Codech. 6 sec. 1 and 2 • Application for a registeredmortgage • A mortgagedeed is issued • Collateral is createdwhen the mortgagedeed is given to the creditor

  10. Registration Land Codech. 22 • Application in writing from the registeredowner • Specifiedsum • Mortgages are ranked in priority, oldermortgagesgivebetterpriority

  11. The MortgageDeed • The deed is returned to the propertyownerwhen the debt is paid • The deedcan be usedagain for another credit, with unchangedpriority • 90 % of all mortgagedeedshavebeencomputerized, butpaperdeeds are still important for private creditors

  12. Executionarysales • Everything is handled by the Enforcement Service (Kronofogden), but a salecan be brought to court • The first step, whenpayment lacks, is that the Service decides on a foreclosure • The sale (3 to 4 months later) is normally an auction • The proceeds from the sale are distributed in accordance with priorityonemonth later

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