Mortgage and security interest are two similar terms, both referring to a collateral created in order to secure a debt by one party to the other. They operate similarly, both give preferential rights to the secured party in the disposition of assets in question.
The basic difference is that mortgage is a traditional way of securing obligations under the common law, typically used in property transactions. In contrast, a security interest is a statutory creation, namely it is the instrument created for securing obligations typically in a commercial transaction under the Uniform Commercial Code.
The ultimate purpose of both mortgage and security interest is the same, the holder of the security interest/mortgage is entitled to freely dispose of the property subject to the agreement in order to discharge the debt that such instrument secures.
The process of enforcing claims through the seizure of property secured by a mortgage is called foreclosure. The process is aimed at recovering the outstanding loan from the mortgagor, who has defaulted on the loan by forcing the sale of the asset. In most American states, the Deed of Trust is the legal document which technically granted the collateral to the mortgage holder.
This process is also applied in more complex transactions, where the mortgage is created to secure a financial instrument, namely a promissory note.
The process of obtaining satisfaction for debts arising from a security interest is regulated by the UCC. It is further strengthened by the process of perfection, which includes a number of steps taken to ensure that the security interest is enforceable against other creditors.
We hope we could help you gain an insight on the difference between the two terms. Should you have any more questions or remarks, feel free to ask us in the comment section!