Legal analysis: If the mortgaged house chooses monetary compensation in the process of demolition, it can negotiate with the mortgagee to re-set the mortgage or claim to pay off the debt. If no agreement can be reached with the mortgagee, the mortgagee may notify the person to be demolished not to pay the compensation fee temporarily. If the mortgaged house chooses the way of property right exchange in the process of demolition, it can re-sign the mortgage contract and re-register the mortgage on the house after property right exchange as collateral and mortgage. If no agreement can be reached on re-mortgage, the mortgagee may notify the demolished person to temporarily stop signing the resettlement compensation agreement.

Legal basis: Regulations on Expropriation and Compensation of Houses on State-owned Land Article 8 In order to safeguard national security, promote national economic and social development and other public interests, if it is really necessary to expropriate houses under any of the following circumstances, the people's government at the city or county level shall make a decision on the expropriation of houses: (1) National defense and diplomatic needs; (two) the needs of the government organization and implementation of energy, transportation, water conservancy and other infrastructure construction; (three) the needs of public utilities such as science and technology, education, culture, health, sports, environmental and resource protection, disaster prevention and mitigation, cultural relics protection, social welfare, and municipal utilities organized and implemented by the government; (four) the needs of the construction of affordable housing projects organized and implemented by the government; (five) the needs of the old city reconstruction organized and implemented by the government according to the relevant provisions of the Urban and Rural Planning Law; (six) the needs of other public interests as prescribed by laws and administrative regulations.