PROPERTY MORTGAGE LOANS

Property mortage in Anglo-American law, any of a number of related devices in which a debtor (mortgagor) conveys an interest in property to a creditor (mortgagee) as security for the payment of a money debt. The Anglo-American mortgage roughly corresponds to the hypothec in civil-law systems. The modern Anglo-American mortgage is the direct descendant of a form of transaction that emerged in England in the later Middle Ages. The mortgagor (debtor) conveyed the ownership of land to the mortgagee subject to the condition that, if the mortgagor repaid a debt he owed the mortgagee by a certain time, the mortgagee would reconvey the land to the mortgagor. If the mortgagor failed to repay the debt by the time that was specified in the mortgage, the land became the mortgagee's absolutely. This form of transaction was known, under different names, throughout the ancient world and throughout medieval Europe. It is to be distinguished from types of security devices (also known both anciently and today) in which the debtor gives the creditor possession but not ownership of the property (the pledge in civil-law systems and the gage of land in the early English common law) or in which the debtor does not even give the creditor possession of the property but simply a right to satisfy the debt out of the property if the debtor fails to pay (the lien or hypothec).

Welcome to Property Mortgage The common-law mortgage of the late Middle Ages was thus a strong form of security. The history of its development is one of progressive loosening in favour of the mortgagor. Already at the end of the Middle Ages, it had become the practice for the mortgagee to allow the mortgagor to remain in possession of the land, and this practice developed into a right in the mortgagor to remain in possession of the land so long as he was not in default on the debt. Initially, the common-law courts interpreted the conditions in mortgages strictly. In the 16th and 17th centuries, however, the English equity courts intervened on the side of the mortgagor. Equity first gave the mortgagor a right to redeem the land by paying the amount that was owing, even after he had defaulted on the debt, so long as he did so within a “reasonable time.” In order to clear their title to the land after the mortgagor had defaulted, mortgagees brought actions in equity to foreclose the mortgagor's “equity of redemption.” As a condition of granting the foreclosure, equity gave the mortgagor a right to the proceeds of the sale of the land to the extent that the sale realized more than the outstanding amount of the debt. In most Anglo-American jurisdictions, legislation in the 19th century extended the mortgagor's right to redeem to a fixed period after the mortgagee had foreclosed. Finally, in manyAnglo-American jurisdictions, legislation required that the mortgagee sell the land at public sale after he had foreclosed, and in some of these jurisdictions the sale had to be conducted by a public official.