What is the effect of a mortgage that has not been recorded?

A mortgage that has not been recorded is effective between the lender and the borrower, meaning that the terms of the mortgage agreement are binding on both parties. This private agreement outlines the obligations and rights regarding the loan but lacks legal standing against third parties because it hasn't been made a matter of public record.

In real estate, recording a mortgage is crucial for establishing priority of claims against the property. When a mortgage is recorded, it secures a public notice of the lender's interest in the property, which is important in determining how liens are prioritized. However, the effectiveness of the mortgage as it pertains to the relationship between the borrower and the lender remains intact, hence they are still bound by the agreement.

The other options describe scenarios that don't accurately capture the implications of an unrecorded mortgage. Such a mortgage cannot be considered voidable by the borrower, nor is it universally enforceable in court against third parties. Allowing refinancing without notice assumes a lack of obligation to inform others interested in the property, which isn't typically the case with unrecorded mortgages since the lender's rights are less secure without public notice.