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 North Dakota, a mortgage is a legal instrument that involves a promissory note where the borrower (mortgagor) agrees to repay the loan to the lender (mortgagee), with the real property being used as collateral. North Dakota is a title theory state, which means the property title remains in trust until the loan is fully paid, and the mortgage creates a lien on the property. If the borrower defaults on the loan, the lender can initiate a judicial foreclosure process, which involves the courts to force the sale of the property to satisfy the debt. Unlike some states that use a deed of trust allowing nonjudicial foreclosure, North Dakota requires judicial foreclosure, ensuring court oversight in the process. This means that if a borrower fails to make payments, the lender must go through the court system to foreclose on the property, which can be a longer and more costly process compared to nonjudicial foreclosures.