Normally, a mortgage is paid in installments that include both interest and a payment on the principle amount that was borrowed. Failure to make payments results in the foreclosure of the mortgage. Foreclosure allows the mortgagee to declare that the entire mortgage debt is due and must be paid immediately. This is accomplished through an acceleration clause in the mortgage. The foreclosure process depends on state law and the terms of the mortgage.
Many states regulate acceleration clauses and allow late payments to be made to avoid foreclosure.
Three theories exist in the United States on who has legal title to a mortgaged property. Under the title theory title to the security interest rests with the mortgagee. Most states follow the lien theory under which the legal title remains with the mortgagor unless there is foreclosure. The intermediate theory applies the lien theory until there is a default on the mortgage and than the title theory. The mortgagor and the mortgagee generally have the right to transfer their interest in the mortgage.