open mortgage clause

Definition of "open mortgage clause"
  1. A provision in a mortgage contract stipulating that any payments related to the mortgage are prioritized for the mortgagee to the extent of their interest. This provision ties the right of the mortgagee to receive payments to the mortgagor's right to reclaim under the policy
How to use "open mortgage clause" in a sentence
  1. The open mortgage clause in the mortgage contract protects the mortgagee by allowing them to receive payments directly from the mortgage insurer.
  2. With an open mortgage clause in effect, the mortgagor's right to recover policy claims determinates how much the mortgagee can receive.
  3. An open mortgage clause is a common inclusion in many mortgage contracts to secure the interests of the mortgagee and bind it to the mortgagor's recovery rights.

Provide Feedback
Browse Our Legal Dictionary
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z