Mort­gages Can Be Cre­ated by One of the Fol­low­ing Meth­ods

Consumer Voice - - Bfsi -

In or­der to stream­line the pro­ce­dure and cre­ate a pub­lic do­main for un­reg­is­tered eq­ui­table mort­gage (UREM) prop­er­ties un­der loan to any bank/FI, thereby en­abling the consumer to view the ‘charge’ on any prop­erty un­der loan, the Govern­ment of In­dia has es­tab­lished the Cen­tral Registry of Se­cu­ri­ti­sa­tion As­set Re­con­struc­tion and Se­cu­rity In­ter­est of In­dia, un­der the SAR­FAESI Act. This Act per­tains to at­tach­ment/auc­tion of UREM prop­er­ties un­der bank/FI loan of one lakh ru­pees and above; fur­ther, th­ese are in ‘non-per­form­ing as­set’ cat­e­gory and the mort­gage in such cases has been cre­ated in favour of the lend­ing in­sti­tu­tion.

Be­fore un­der­stand­ing CERSAI, it will be use­ful to un­der­stand the var­i­ous types of mort­gages, as CERSAI regis­ters only eq­ui­table mort­gages.

Why Cre­ate Eq­ui­table Mort­gage with Banks?

in­sti­tu­tion in con­sid­er­a­tion of loan (value) ob­tained (re­ceived). a hold on the prop­erty doc­u­ments till the loan/ ad­vance is re­paid in full. So this loan ac­count can never go bad. against prop­erty, while re­tain­ing his pri­mary rights over the prop­erty. He or she is only asked to sub­mit/de­posit orig­i­nal ti­tle deeds of the prop­erty with an in­ten­tion to cre­ate an eq­ui­table mort­gage. The loan is pro­cessed faster than other loans. a) Sim­ple reg­is­tered mort­gage (SRM)

There is no sale of the prop­erty to the lender; the pos­ses­sion re­mains with the owner but on non­pay­ment of the loan, the prop­erty can be sold. b) English mort­gage

The en­tire prop­erty is trans­ferred in the name of the lender, and on re­pay­ment it is trans­ferred back to the orig­i­nal owner of the prop­erty. c) Usufruc­tu­ary mort­gage

This al­lows trans­fer and pos­ses­sion of the prop­erty in favour of the lender, but the orig­i­nal ti­tle deeds re­main with the owner. d) Mort­gage by con­di­tional sale

Fail­ure to pay the loan will en­tail the sale of the prop­erty. e) Un­reg­is­tered eq­ui­table mort­gage (UREM)

This is mort­gage by de­posit of ti­tle deeds. Here, you will need to hand over to the lend­ing bank the prop­erty doc­u­ments in its orig­i­nal form for the bank to process your loan ap­pli­ca­tion and sub­se­quent sanc­tion for the cap­tioned pur­poses. What the bank does is to keep the orig­i­nal prop­erty doc­u­ments in its safe cus­tody as main/col­lat­eral (sup­ple­men­tary) se­cu­rity for the loan sanc­tioned. The bank keeps the prop­erty doc­u­ments till you clear the loan against it. It means that you cre­ate an in­ten­tion in favour of the lend­ing bank for de­posit of orig­i­nal ti­tle deeds of the prop­erty for value re­ceived (con­sid­er­a­tion of a loan). There is no pay­ment of stamp duty for this act of yours. The ti­tle deeds are only kept de­posited with the bank in good faith, with­out cre­at­ing any charge or reg­is­tra­tion. This is what is called cre­at­ing an un­reg­is­tered eq­ui­table mort­gage (UREM). This is a per­fect and le­gal method of cre­at­ing a ‘charge’ against the prop­erty mort­gaged in favour of the lend­ing in­sti­tu­tion.

This is the most com­mon and pop­u­lar method of mort­gage cre­ation by con­sumers in favour of banks; here the most im­por­tant el­e­ment is cre­ation of an in­ten­tion or in­ter­est on the prop­erty mort­gaged. As al­ready men­tioned, this is the cheap­est way

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