Mortgage would be best described as security instrument. The document signed by everyone for obtaining mortgage loan. The document has still been used in most states.
The downside of using mortgage instrument while lending money, pertaining to the perspective of the lender, would be when default made by the homeowner on mortgage, Sun West Mortgage would be required to go to court for foreclosure and take house along with property back in order to recover the losses. The lender could obtain a judgment through the process of judicial foreclosure. It would be availed against the defaulting homeowner. It would be designed for covering the losses.
Going to court for foreclosure on mortgage home loan would be time-consuming. It would be using loads of legal resources. Moreover, a homeowner would be has more rights in a court of law. Numerous states have moved the court using different instrument. Refinancing and homebuyers residential homeowners would sign a note and deed of trust. It would be pertinent to mention here that note would be deemed as a promise to repay and deed of trust describing the terms of repayment along with adding a third party, which is the trustee.
In event of lender looking forward to seeking foreclosure and take back the collateral due to default, the lender would be able to sell the collateral at Trustee auction. In event of no bidders available at auction, the home would be given back to the lender. The lender, Sun West Mortgage would be able to resell the collateral as an owned real estate, foreclosed home for recovering the costs.
It would not be wrong to suggest that such kind of foreclosure would be deemed better for the lender, as the cost of foreclosure would be relatively less than going to court. The home owner would have fewer rights at foreclosure auction.