What are states called where title is conveyed to the mortgagee?

The correct term for states where title is conveyed to the mortgagee is "title theory states." In these states, when a borrower takes out a mortgage, the title to the property is transferred to the lender or mortgagee as a form of security for the loan. This means that the lender has a legal claim to the property, and the homeowner retains possession but does not hold the title until the mortgage is satisfied.

This arrangement reflects the lender’s interest in the property, giving them the right to foreclose if the borrower defaults on the loan. Title theory contrasts with other approaches, such as lien theory, where the borrower retains the title while the lender holds a lien against the property.

Understanding this distinction is crucial for real estate professionals and potential homeowners, as it affects the rights and responsibilities of both parties involved in a mortgage agreement.