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Paper Examines Historical Origins of America’s Mortgage Laws

WASHINGTON, DC – October 23, 2012 – (RealEstateRama) — Today the Mortgage Bankers Association (MBA) released a paper entitled, “The Historical Origins of America’s Mortgage Laws,” conducted by Andra Ghent, Assistant Professor of Real Estate at Arizona State University and sponsored by MBA’s Research Institute for Housing America.

This paper examines the different legal frameworks for mortgage markets in different states, focusing on how and when they came into existence, including the British influence on laws in some of the older states, with a particular emphasis on foreclosures, including judicial vs. non-judicial regimes, redemption rights and deficiency judgments. Ghent concludes that mortgage laws in America are a patchwork driven by path dependence, rather than a coordinated effort or a reaction to some economic event or condition.

“This research shows that, historically speaking, mortgage laws in this country are not the result of intentional design, nor were they necessarily driven by a consistent set of economic events or circumstances,” said Mike Fratantoni, RIHA’s Executive Director. “As a result, there may well be significant gains from ongoing efforts to harmonize these laws across the states.”

“With the exception of anti-deficiency statutes, mortgage laws seem to be the outcome of path-dependent quirks in the wording of various proposed statutes and decisions of individual judges, said Andra Ghent, Assistant Professor, W.P. Carey School of Business at Arizona State University. “Mortgage laws have been extremely slow to change, and while this slow adjustment is perhaps necessary to maintain the integrity of the rule of law in a common law legal system, the result is a diverse set of laws that seem poorly suited to a mortgage market that is increasingly integrated across state borders.”

Topics covered in the paper include:

• Mortgages and Foreclosures in America Today
• The English Origins of American Mortgages
• Title vs. Lien Theory
• The Historical Development of Foreclosure Procedures
• Redemption Rights
• Restrictions on Deficiency Judgments and the One Action Rule

To view the paper, click here.


The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site: