Anciently the borrower deeded his property outright, as security, to the lender, who thereafter was its legal owner. In case of any default he took possession. All the borrower retained was an equitable right to be given back his property if he fully satisfied the loan and interest. He had merely an "equity of redemption." In some States this system is still used, except that until a default occur the borrower retains possession of the property.

In New York and most States however a mortgage is not an actual transfer of title, but only creates a lien, under which in case of default the lender may proceed to collect from the property. The mortgage not being a transfer of title, is personal property. As such it may be passed by assignment, and upon the lender's death goes, not to his heirs as if real property, but to his executors or administrators. Since it is only a lien, there may be a first, second, third or as many mortgages on the property as its owner can procure, each being subject or subordinate to all prior mortgages.