Posted by bronchick on November 23, 1998 at 09:40:40:
In my “Lease/Options Workshop” and “Nuts & Bolts of Creative Real Estate Transactions,” I go into performance mortgages in detail.
Essentially, a mortgage is a security device to guarantee performance on a note. You don’t perform (pay) on the note and the lender (holder of the security instrument) forecloses.
A mortgage can be used to secure performance of any obligation that requires performance, even a lease or contract. Thus, a default on the underlying lease or contract permits the mortgage holder (you) to foreclose the lien. It also makes you a priority secured creditor (like other mortgage holders) in bankruptcy so you won’t get wiped out.