History of Mortgages
May 5, 2009 Mortgage Information
Mortgages are an age-old institution which originally encapsulated a much simpler transaction: one in which the owner of a property transferred it to another with the expectation that the transferee would be able to make payment only after a time through the proceeds of working on the land that had been transferred. Clearly, the institution originated in an economy which was predominantly agricultural. Until the money originally agreed had been paid off, however, the original owner of the land still retained title to it and could dispose of it as he saw fit, including selling the land, even if the mortgagor had done significant work on it and improved its inherent value.
This imbalance of power in the law was ripe for abuse and indeed was abused frequently over the years. It is only in more modern times that mortgages in their current form were given legal definition, allowing the mortgagor to act as owner of the new property and to retain it unless the mortgage payments are defaulted on.
Up until the twentieth century, home ownership was quite rare in many Western countries, even among the wealthy. No social stigma was attached to renting and mortgages were expensive and difficult to obtain. It was only towards the middle of the twentieth century that this changed and home ownership became a mass phenomenon.