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 Ohio, a mortgage is the standard legal instrument used to secure the repayment of a loan for the purchase of real property. The mortgage agreement includes a promissory note where the mortgagor (borrower) agrees to repay the borrowed amount to the mortgagee (lender), with the real property acting as collateral. Ohio operates under a lien theory, meaning the borrower retains title to the property but grants a lien to the lender. If the borrower defaults on the loan, the lender must go through the judicial foreclosure process, which involves the courts, to enforce the lien and sell the property to satisfy the debt. Ohio does not typically use deeds of trust for real estate transactions; therefore, nonjudicial foreclosure, which occurs outside of the court system, is not common practice in the state. Instead, all foreclosures must be processed through the court, providing borrowers with certain legal protections and due process before a foreclosure sale can occur.