A mortgage lender makes loans to people with real estate as security for the loan. The mortgage is the legal security instrument that ensures the lender can repossess or foreclose on the property in the event of buyer default. A default occurs when the borrower does not make payments as described in the loan agreement between the borrower or mortgage lender or does not meet other obligations as described. Mortgage lenders are regulated by Federal and state laws. Even with the laws and regulations in place, any mortgage lenders wrote questionable loans from 2002 to 2007. In some states an individual can make loans or mortgages on property without being regulated as a mortgage lender. In these states there are often limits to the number of mortgage notes a private individual can hold. This can be a great vehicle for private investors willing to gain the knowledge required to protect themselves.