Registration of mortgage transactions

Qualifying a mortgage transaction, we must say that transactions of this kind:
  • they must be made in writing: simple or notarial (the notarial form was previously mandatory by law, but now it is carried out only at the insistence of at least one of the parties);
  • like all real estate transactions, they are subject to mandatory state registration;
  • have at least two parties signing the contract of sale.
A mortgage transaction is a set of transactions aimed at concluding a loan agreement for the provision of a mortgage loan, acquiring the property of a real estate object to borrowers and transferring it as collateral, as well as concluding other agreements that ensure the fulfillment of their obligations by the borrower. In principle, this can be limited to determining the mortgage transaction.

However, at the same time with this basic transaction and thanks to it, other civil rights arise:
  • the rights of claim of the lender under the loan agreement with the borrower;
  • the rights of the mortgagee in relation to the mortgagor arising from the mortgage agreement and (or) mortgage (mortgage by virtue of the agreement);
  • the rights of the policyholder (i.e. the borrower) and the beneficiary (i.e. the lender) under the comprehensive insurance contract and (or) insurance policy;
  • the rights of the recipient of brokerage and real estate services arising from the relevant contracts.

Participants of the transaction. Despite the fact that the parties to the mortgage transaction are the buyer and seller of real estate, a much larger number of entities participate in its preparation and implementation. First of all, it is, of course, a bank, which is both the primary creditor and the primary mortgagee.

In addition, the participants in the mortgage transaction undoubtedly include:
  • Insurance company
  • Appraisal company
  • Seller's realtor
  • The borrower's realtor
  • Mortgage broker

Let's briefly consider what the role of each of them is.

The Bank establishes a list of insurance and appraisal companies with which the borrower or his representatives interact at the stage of preparing the transaction. He also sets his own requirements for the subject of collateral and the technology of the transaction and verifies the actual compliance with these requirements.

Insurance company - conducts underwriting of the collateral and decides on the readiness of insurance of risks specified by the bank.

Valuation company - evaluates the market value and, consequently, the degree of current liquidity of the collateral.
The seller's realtor (if available) - participates in the collection of the necessary documents for the real estate object.

The buyer - borrower's realtor (if any) represents the borrower's interests in the organization of the transaction, as a rule, in all of the listed instances. He completes the packages of necessary documents, transfers them to their destination, monitors compliance with the deadlines for consideration of these documents, organizes the transfer of funds when reserving an object (advance or deposit) and the execution of a preliminary contract with the conditions for the return of these funds in case of refusal of the transaction, etc.

A mortgage broker is a link between the parties to the transaction. Its task is, at a minimum, informational support of a mortgage transaction, which includes:
  • explaining to the client and the realtor serving him the requirements of the bank and the insurance company for the collateral, as well as the bank's requirements for the technology of the transaction.
  • explanation to the client of the costs to be incurred in the transaction.

But if we really talk about a professional broker, he will not only convey to the client and his realtor the requirements of the bank and insurance company, but also monitor compliance with these requirements before the relevant packages of documents are transferred to their destination. Of course, in this regard, the functions of a broker are closely intertwined with the functions of a realtor serving a buyer-borrower.

How a broker and a realtor will distribute the functions of preparing and conducting a transaction among themselves depends on the specific company in which they work (if it is the same company), on the established technologies there, on the specific personalities of both, on the wishes and preferences of a particular client, etc., etc. But in any case it is extremely it is desirable that the broker is aware of what is happening in connection with the preparation and implementation of the transaction.