The suffix “or” is used to denote the person who performs an action; while the suffix “ee” is used to denote the recipient of that action. Since the buyer/borrower is pledging the property, he/she is “mortgaging” the property and in known as the “mortgagor”. The lender is the recipient of the pledge, and therefore is the “mortgagee”.
One way to remember the difference between the “mortgagor” and the mortgagee:The “o” in “mortgagor” comes from the “o” in “borrower”. The “e” in “mortgagee” comes from the “e” in “lender”:
Another way to remember the difference: BETTER to BE the MORTGAGEE
Just remember: The mortgagor mortgages the property to the mortgagee.
Finally, it is worth pointing out that there was a time that the owner of property could sell property and freely transfer the mortgage to the new owner. Due to the modernization of the credit market, lenders want to know who owes them money. Since the new owner might not be as creditworthy as the original owner/mortgagor, lenders now insert a “due on sale” clause. This clause requires that a mortgage be paid off when the underlying property is sold. Nowadays, the seller sometimes finances some of the buyer’s needs; and sometimes a relative or friend might give the buyer a second loan on top of the bank loan. Otherwise, the mortgagee is always a financial institution.