A mortgage is a contract or agreement that includes a promissory note in which the mortgagor (borrower) agrees to repay the loan to the mortgagee (the lender—often a bank) and agrees that the real property that is the subject of the mortgage will serve as security or collateral for payment of the loan.

If the mortgagor (borrower) fails to timely make the loan payments, the lien created by the mortgage allows the mortgagee (lender) to seek judicial foreclosure on the property (a forced sale effected through the courts) and use the proceeds to pay the balance of the loan—plus any additional fees and penalties the mortgagor (borrower) is obligated to pay.

Some states use a mortgage agreement to secure the repayment of a loan for the purchase of real property and some states use a deed of trust.

In a mortgage, the mortgagor (borrower) retains title to the property (ownership) and grants the mortgagee (lender) a lien on the property. The mortgagor and mortgagee are the only two parties to the transaction and if the mortgagor defaults on the loan, the mortgagee must seek judicial foreclosure of the lien through the courts to sell the property and use the proceeds to satisfy the loan.

In a deed of trust, the grantor (borrower) transfers title (ownership) of the property to a third party (the trustee—often a title company) to hold title to the property as security or collateral, protecting the grantee (lender) until the grantor (borrower) repays the loan in full.

When a deed of trust serves as the security or collateral for the loan on the property, the lender may sell the property without going through the court system—and this is known as nonjudicial foreclosure. Nonjudicial foreclosure is usually less time-consuming and less expensive for the lender.

In Massachusetts, a mortgage is the prevalent legal instrument used to secure a loan for the purchase of real property. The mortgage agreement includes a promissory note where the borrower (mortgagor) agrees to repay the borrowed amount to the lender (mortgagee), with the real property acting as collateral. Should the borrower default on the loan, the lender has the right to initiate a judicial foreclosure process. This means that the lender must go through the courts to enforce the lien and sell the property at auction, using the proceeds to pay off the remaining loan balance, along with any additional fees and penalties. Unlike some other states, Massachusetts does not typically use a deed of trust, which involves a third-party trustee and allows for nonjudicial foreclosure. Instead, the borrower retains the title to the property while granting a lien to the lender, and any foreclosure process must be carried out with judicial oversight.