Talk:Mortgage

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[edit] Dead pledge

There have been some "helpful" people changing dead pledge to "death pledge". The former makes more sense than the latter. The mortgages derive from pledges, but the pledge element has ceased to operate and is "dead". "death pledge" conjures ideas of something made in a will.

The analysis (the pledge being dead) is from Littleton so is authoritative. A friend, who holds a Phd in Romance linguistics tells me that "dead pledge" is, in any case, the better translation.

So please no more changes without discussing it here. Francis Davey 21:56, 25 November 2005 (UTC)

I wholeheartedly agree. Lawrence Lavigne 22:42, 25 November 2005 (UTC)

[edit] Edits

I've made some edits to the top of the page, and I thought I should explain them so that they don't get needlessly reverted.

  1. the fact that mortgages differ in form the world over means that we need to avoid a term like "conditional pledge", or "lien", which have specific meanings in some jurisdictions that exclude mortgages. I've used "method" as a neutral term.
  2. "chattels" is a bit too specific and technical "other property" will do I suggest.
  3. I've reduced or removed references to real property, "fee simple" and so on. Ship mortgages are just too important to ignore mortgages of personalty.
  4. I've tried to reduce the level of technicality slightly (eg in definition of a mortgage by demise)
  5. I think The property is offered as security to the lender by way of a legal charge (technically charge by deed expressed to be by way of legal mortgage) to ensure the debt is honoured. is much too technical, since it doesn't really say what a "legal charge" is, and the terminology "deed... legal mortgage" sounds very England and Wales POV to me.
  6. The following text:

In legal terms, the creation of a mortgage by legal charge gives the legal title of the land to the debtor and an equitable title (called "equity of redemption") to the creditor. The legal title, however, only exists as a security for a debt and does not convey any title or powers associated with real property.

Is simply wrong (there is an equity of redemption in both classes of mortgage and the legal title in the mortgagor is far from illusory; the creditor does not gain an equitable title -- the debtor has the equity of redemption -- they have a charge) etc.

  1. It may be that in some jurisdictions the registering of a mortgage creates a lien, but not here and not, I suspect, in quite a few other places. Besides a lien isn't a mortgage everywhere.
  2. In England and Wales there are still two ways of mortgaging real property: by demise of leasehold or by way of legal charge, so I have deleted an inaccuracy there.
  3. I've deleted everything that is said about mortgage instruments. Until I've seen some evidence of any common form of instrument, it should stay that way. I can grant a mortgage by way of deed, I suspect I can grant an equitable mortgage more easily than that still.
  4. I've added some more explanation to the history section and I am actively researching the position in US states to augment my own knowledge of EW. Francis Davey 22:15, 7 November 2005 (UTC)

[edit] Accuracy

As written the definition part of this article is hopeless. First it assumes that all mortgages are mortgages of real property -- whereas it was perfectly possible to mortgage any property and indeed ship mortgages are very important in England and Wales. Second, in my common law jurisdiction, a lien is quite a different thing from a mortgage. The notions may have merged elsewhere, but that needs to be clear in the definition. Hmmmmm. Francis Davey 20:45, 26 August 2005 (UTC)

I've just tried to improve the accuracy a bit. Historically mortgages are not liens (I checked). Francis Davey 19:41, 1 September 2005 (UTC)

No offense to the people who wrote this article, but (to a layman) it reads like it was translated (badly) from another language. Just try the 2nd paragraph:

At common law, a mortgage was a conveyance that on its face was absolute and conveyed a fee simple estate, but which was in fact conditional, and would be of no effect if certain conditions were met --- usually, but not necessarily, the payment of a debt by the original landowner. Hence the word "mortgage," Law French for "dead pledge;" that is, it was absolute in form and in theory required no further steps to be taken by the creditor.

Can someone who understands it better than I please clarify the article. (I would if I know more about them) →Raul654 10:19, Feb 1, 2004 (UTC)

Can anyone add the history of mortgages? I know they were not known under Roman law; I know that one pope had to issue special bulla to allow mortgages in Poland - i know that they were popular in Poland since XIV or XV century, the same with Bohemia, and that Polish laws on mortgage were partly then adopted by Prussians (and Austrians too?)... Szopen

I've heard that most US mortgages are based on a 360 day year. Using the equations provided, they match with numbers of an amateurization schedule that supposedly fit a 360 day year calculation. Does anyone know the specifics of this?--Mylon 14:59, 2 Apr 2005 (UTC)

I wanted to comment on the following: In legal terms, the creation of a mortgage gives the legal title of the land to the mortgagee and an equitable title (called "equity of redemption") to the mortgagor. The legal title, however, only exists as a security for a debt and does not convey any title or powers associated real property.

I only have a first year law student's property class understanding of mortgages, but I can say that whether a mortgage conveys title and what powers are invested in the mortgagee by that title depends on the State you're in. For example, some states, known as lien states, do not transfer title. (see this Buffalo Law School, State University of New York, Professor's mortgage page). Is there an attorney who is willing to edit the entry? →Bmg 15:15, Jun 18, 2005 (UTC)

They don't convey title here (England and Wales) either, I've tried to amend the main heading a little. Here you can convey leasehold title, but that is now rarely done. Francis Davey 19:41, 1 September 2005 (UTC)

[edit] Difficult to understand

I agree that this article is very difficult to understand. I thought that I knew all about mortgages, but couldn't begin to make edits to this text.

Is the article refering to mortgages in the US? Maybe that's why it makes no sense to me in the UK? --JimmyTheWig 12:08, 20 Jun 2005 (UTC)

I think that the article certainly starts out very clear and concise. After that it does get a bit difficult to understand. I think that some of this is just that the article is getting pretty long (31K) with lots of details. Perhaps we can break off more content into other articles. There's already an article just for UK mortgage terminology, for example.
I'm thinking that some of the details about the notes can be left in other articles. For example, some of the details about how the note amortizes (full, balloon, interest only, option, bi-weekly) and how payments are adjusted (fixed, adjustable rate, hybrid, graduated payment) could probably be made simpler in this main article.
What else could we pare off? Sciprogrammer 06:13, 6 November 2006 (UTC)
The sections specific to the US and the UK could go in separate pages; in fact a lot of the info is specific only to the US and could be generalized to make reading easier. Likewise, the more specific legal details could probably be split out (i.e. deed of trust vs everything else). It may also be worthwhile to split out residential mortgages entirely. I also agree that the specifics of the notes are not needed here. The interest types could also be split out into a separate article or series of articles.--Gregalton 08:26, 14 December 2006 (UTC)

[edit] Deeds of Trust

This article makes absolutely no mention of a deed of trust, which is a critical instrument in the process of mortgaging in the State of North Carolina, USA, and presumable other many other states and nations which have similar laws regarding real property interests and secured debts.

In North Carolina, a mortgage commonly refers to a loan which is secured by an interest in real property. The loan is secured by a contract called a Deed of Trust. When a purchaser obtains title to a property, the property is convened by a document called a transfer deed. If previous owner conveys the fee simple interest in the property in conjunction with a warranty of title, the transfer deed is more specifically referred to as a warranty deed; if the previous owner is simply relinquishing his, her or its claims to any interest in the property to another party, the transfer deed is more specifically referred to as a quitclaim deed.

Typically, if a property is purchased with conventional financing, the seller prepares a waranty deed conveying fee simple interest to the buyer. The lender prepares a document called a deed of trust, which states that the buyer agrees to pay back the pertinent loan, and that if the buyer defaults, title to the property will transfer to a trustee (not the lender) who is obligated to sell the property to the highest bidder at the courthouse door, the proceeds going to repay the loan.

The warranty deed, deed of trust, and the funds necessary to compensate the seller are delivered to an attorney, who files the deeds simultaneously with the county register of deeds. All signatures are notarized to ensure the authenticity of the parties. The money is disbursed to the seller, and (or) to the seller's lender, if a previous deed of trust need be satisfied. The purchaser is typically required to carry title insurance, which is usually procurred by the attorney.

In all deeds, the party conveying an interest is called the grantor, and the party receiving an interest conveyed is called the grantee, usually with the singular male term representing any single, plural, male, female, private or corporate entity; in antiquity, grantees, grantess, and grantesses may have been used.

Before the new owner may convey his, her, or its acquired fee simple interest in the subject property, the register of deeds will require that the deed of trust be satisfied (cancelled). This typically occurs by the lender's attorney filing a satisfaction (cancellation) of the deed of trust with the county register of deeds at such time that the mortgage is repaid.

If the owner cannot repay the debt, the fee simple interest to the property is conveyed to the trustee, who then offers the property for auction at the courthouse door. Typically there are no sufficient bids, and the lender bids the amount equal to what remains owed. Then title passes to the lender by means of a transfer deed.

The lender will then typically sell the property on the open market in order to reclaim the loss. --Mm35173 19:22, 3 August 2005 (UTC)

Fascinating. I wonder how that system of mortgages was developed. It is nothing like the historic system that operated in England (where the concept originated). Can you give a reference for the above? It could go in as a variant.
See [1] and adjacent chapters of the state general statutes. BTW, I am a real estate appraiser, not a lawyer.

--Mm35173 18:13, 21 September 2005 (UTC)

In WA state, also, there are technically two options: mortgage and deed of trust, and all transactions are deed of trust rather than mortgage because deed of trust allows nonjudicial foreclosure and the debtor has no redemption rights. I'll add this if no one else does it.--Zilonis 14:00, 27 July 2006 (UTC)
This is specific enough that perhaps a separate article and a link to it would be more useful? It is detailed enough and useful info to warrant a separate article. —The preceding unsigned comment was added by --Gregalton 08:31, 14 December 2006 (UTC)

[edit] Predatory mortgage lending

I removed the section with the above title, created a separate article and included a link to the new article. The main reason for doing so is the issue being discussed is not NPOV and smacks of a personal crusade by the author.

Secondly the mortgage page has been refined by numerous editors for some time now to give some logical flow to the subject and to remove country specific language and bias. The author of this section is obviously writing from a US perspective and makes reference to many US only issues. To the general (global) reader these references are meaningless.

I suggest the content be re-written from an informed global perspective and include possibly as part of a mortgage regulation page that discusses the need for regulation and different approaches from around the globe. I will be happy to add the UK perspective to the page. simonthebold 09:38, 10 April 2006 (UTC)

Simon, I would welcome a global perspective on the subject of predatory mortgage lending. But I fail how it can be described as a "personal crusade". On the contrary, its a valid subject which should be addressed in any article on mortgage. At the very least there should be some mention of this within the body of the article. Piercetp 00:10, 11 April 2006 (UTC)
I saw the edit and it suits me fine. Good work Simon. I am glad we could come to an agreement in a mature way.Piercetp 20:42, 11 April 2006 (UTC)

[edit] Torrens title registration system

I removed this section of the article. While it does relate to the recording/registration of interests in land, it has nothing specifically to do with Mortgages and is covered in more appropriate articles. 24.248.56.59 18:59, 13 April 2006 (UTC)

[edit] Formulas

Would it be possible for someone to include the formulas used in creating/managing mortgages? http://www.datadynamica.com/FinCalc/Fin3.htm might be helpful. It would also be helpful to include a formula to find which month the mortgage is in... Like month 230 of 360 without having to count... possible? Just my 2c.

Don't really have to count. Is 12 * elapsed years + months really that difficult to calculate?

Average Percentage Rate (APR) Calculations are very important to the mortgage market as they are used as a comparison for the mortgage rates. In the UK and EU they have different requirements to the USA when doing APR calculations. There is a good list of the difference in these criteria here http://www.ukmortgagez.co.uk/APR_calculations.htm I hope this helps.

[edit] Islamic mortgages

"All of these methods are still compensating the lender as if they were charging interest, but the loans are structured in a way that in name they are not."

Shouldn't the article mention that if the bank buys the house first and then rents it with an option to buy to the debtor it is assuming the risk of the transaction? I'm not editing the article because I don't have sources and I'm not really sure, but in Spain the law says that if you can't pay the monthly mortgage payment the bank can get the house, auction it (with a less-than-market price) and if that's not enough to pay off the loan you must keep on paying the difference, so if the house price drops you find yourself paying a high price for a small home. With Islamic mortages (this is where I would need sources) if the creditor can't pay the loan the bank keeps the house but since it wasn't lending you money but renting the house it can't keep charging the creditor for it, doesn't it?

Also, my first wikipedia post, my name is Joaquin. This might go wrong, hope it helps

OK, I already did the edit. Asked an islamic friend and he told me that the risk sharing is true. I am still looking for a good souce to link to this. There are some Islamic Mortgages like UM Financial and Salam Financial. All they do is that you pay 25% of the house then you pay them the rest every month using 0% interest Then what does the bank earn?

The interest is still there, just being called a different name. Think of a finance lease: you make an advance payment and monthly payments. At the end you may "own" the asset. There is no interest identified as such, but the interest is implicit (I can assure you the banks doing islamic finance are calculating "interest" for their internal use).--Gregalton 08:35, 14 December 2006 (UTC)
The description of Islamic mortgages has been taken out of the article for some reason. Could it either be put back, or a link to a new article made, please? --New Thought 09:10, 8 March 2007 (UTC)
This article is now only about the legal concept of a mortgage (" legal mechanism used to secure property in favor of a creditor"). It was split up, with the information about the loan in a new article; the information you seek is now in mortgage loan. Notinasnaid 09:15, 8 March 2007 (UTC)

[edit] Do predatory practices exist world wide?

I am wondering because the article cites Predatory Mortgage practices only in the context of the United States. Either the laws regarding unethical mortgage practices are very strict in other countries and well enforced (as they should be.... sorry a bit of personal opinion here), or the practices have not been addressed in the article. Piercetp 18:43, 19 November 2006 (UTC)

[edit] Propose split into mortgage and mortgage loan

Looking at this article, it seems that it began as an article on the mortgage itself (the legal concept of security); and has now morphed into a long article on mortgage loans and mortgage lending. I would propose splitting this into separate articles. Are there opinions on this? Anyone massively object? —The preceding unsigned comment was added by Gregalton (talk • contribs) 08:53, 15 December 2006 (UTC).

In absence of responses and in the interest of being bold[2], I've moved much of the text to mortgage loan, leaving the legal mechanism of a mortgage/security here. This should also be an opportunity to get more specific/less specific for various countries. Grateful all reactions, but before reverting back, please look at the other page and see if this split makes sense.--Gregalton 15:29, 16 December 2006 (UTC)
I strongly agree; the split makes perfect sense.Anoneditor 03:08, 18 December 2006 (UTC)

[edit] Other Terminologies

It seems to me that a problem with this section of the article is that it is heavily influenced by U.K. practice; some of the terms, such as "sealing fee" have no usage in the U.S. Perhaps the section ought to be labeled as U.K. mortgage "jargon," and a separate section added to the treatment of U.S. mortgages covering the same kinds of issues. Also, "Bridging Loan" probably doesn't belong here because it is not a mortgage issue, as such, but merely one of many kinds of loan that might or might not be secured by a mortgage. Anoneditor 22:52, 28 December 2006 (UTC)


[edit]The deed of trust The deed of trust is a deed by the borrower to a trustee for the purposes of securing a debt. I don't understand the above part of this article. Is it possible to explain without using the word 'deed' in the definition.

84.9.43.190 16:14, 8 January 2007 (UTC)

I don't think you can explain the deed of trust without reference to a deed. However, perhaps a better understanding of this requires a trip down the memory lane of the English common law of mortgages. I believe the early practice in England was for a borrower to secure the repayment of a debt to his lender by giving the lender the deed to his property. In the eyes of the English law courts, this deed was a conveyance of the title to the property that made the lender the owner even though the lender's agreement with his borrower was that he would reconvey the title to the property back to the borrower when the debt was paid. Notice that this is the use of a deed to the property to secure the repayment of a debt.
The original states of the U.S. adopted the old English law on this subject. However, in modern times in the U.S. (and I believe in England, too) securing the repayment of a debt with the title to land is performed by the borrower giving a mortgage to his lender, rather than a deed. However, if a deed is used for this purpose, the statutes of almost every state deem the deed to be a mortgage. That means that the deed does not convey title to the property but merely creates a mortgage lien upon it for the amount owed.
Foreclosures of mortgages (or deeds deemed mortgages) usually must be done through court process. However, many states will allow foreclosure of a mortgage lien by a much faster out-of-court auction process if a deed to a trustee (who is nominally a trustee for the borrower and the lender). This is the deed of trust to which the article refers. Just as with the deed given directly to the lender to secure repayment of the debt, almost all states view deeds of trust as creating mortgage liens rather than putting title to the property in the mortgage lender. However, they will allow the quicker, non-judicial foreclosure process if these instruments are used.
Please let me know if this is not helpful. It occurs to me that I may have told you how to make a clock when all you asked me for is the time. Anoneditor 03:36, 9 January 2007 (UTC)

There seems another problem with this section: it does not properly reflect that this article is about the legal mechanism, and not about the loan. The following do not seem to belong here: Base rate, bridging loan, Early Redemption Charge / Pre-Payment Penalty / Redemption Penalty, equity, Mortgage Payment Protection Insurance, Private Mortgage Insurance. Comments? Notinasnaid 23:27, 27 March 2007 (UTC)

I agree. This is likely remaining stuff from the mortgage/mortgage loan split of the article. There is probably more that should be edited out.--Gregalton 15:34, 28 March 2007 (UTC)
I also agree. Not enough time to pull it all out, but then this article in general seems rather confused. Sephui 16:54, 28 March 2007 (UTC)
Add my vote, too. I agree this should be about the legal aspects of mortgages and not the business of mortgage lending. Maybe I can do some work in it. Anoneditor 23:25, 28 March 2007 (UTC)
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