Each state within the U.S. varies significantly from the other on its mortgage laws both on the legal theory that inspire mortgage contracts and how the rights of creditors are balanced with that of borrowers. Despite these differences, mortgage laws across the U.S. can be traced back to America’s history. However, to better understand how mortgage fraudulent activities occur, it is essential to trace the history of mortgage laws in the U.S including how states adopted statutes that currently govern real estate security instruments such as deeds of trusts and mortgages and what caused differences on the time required for the borrower to redeem the property before or after foreclosure.
The word mortgage was conned from a French term which means death pledge; thus, the pledge ends when either the property is taken through foreclosures or the obligation to pay the amount required within a specific period is fulfilled (The free dictionary, 2013). History of the U.S. mortgage laws starts in the medieval England where mortgages were based on the title theory of mortgage law. Early English laws were derived from civil law and the Roman hypotheca (Kent, 1830). The debtor kept the property while the creditor (lender) was entitled to action hypothecaria (obtaining possession when debtor was in default). Kent, (1830) states that under civil law, a pledge could not be traded whilst lacking judicial approval except in the present of a special agreement.
Under title theory of mortgage law, a lender has the right to formal ownership of the property for the duration of the mortgage (Kent, 1830). However, borrowers legally own the property during terms of the mortgage under lien theory (Gadow, 2000). During this period, all lending interests we...
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The Making of the Ghetto: One of the biggest forms of equity is home ownership, and between 1933 and 1978, the Federal
Likewise, Andra C. Grant says, “Between 1929 and 1932, home prices in New York fell an average of 50% and the unemployment rate rose substantially. As a result, many residential mortgages were at serious risk of foreclosure. Lenders in the 1930s faced substantial incentives to avoid foreclosure” (Grant). Most Americans couldn’t afford to buy a home prior to this downfall. The down payment was 80% upfront, and people only had five to seven years to pay the remaining amount (“How Did the FHA Help End the Great Depression?”). However, in 1934 a reform called the Federal Housing Administration uprooted. (“How Did the FHA Help End the Great Depression?”). It helped recreate the failing housing market. It is known for lowering down payments, creating a longer loan period, and introducing the idea of paying interest over time and loan standards (“How Did the FHA Help End the Great Depression?”). Through solving the housing problems, the Federal Housing Administration helped get America back on its
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Jackson highlights the steps taken by President Hoover’s Administration to avoid being forced into the creation of American public housing. He leads us through the fight to prevent public housing into Franklin D. Roosevelt’s presidency, where we get the Federal Housing Administration and the Veterans Administration. Jackson argues that these two administrations revolutionized home financing. At this point, Jackson shows us how prejudices and a perceived need for segregation influenced the Federal Housing Administration, which gives us the phenomena observed by Mohl in his articles. Further along in his article, and after a case study of St. Louis, Jackson makes the assumptions that the federal policies not only favored the suburbs, but also preferred neighborhoods given a “B” grade. He also claims that private lenders were influenced by the Federal Housing Administration. Moving on into the second half of his article, we see how public housing got its start. Jackson notes that while public housing was successful in providing affordable housing to poorer Americans, it was less than successful through the eyes of its supporters. In agreement with Mohl, Jackson finds that public housing reinforced
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Mortgage loans are a substantial form of revenue for the financial industry. Mortgage loans generate billions of dollars in the financial industry. It is no secret that companies have the ability to make a lot of money by offering a variety of mortgage loan products. The problem was not mortgage loans but that mortgage companies were using unethical behavior to get consumer mortgage loans approved. Unfortunately, the Countrywide Financial case was not an isolated case. Many top name mortgage companies have been guilty of unethical behavior. Just as the American housing market was starting to recover from its worst battering since the Great Depression, a new scandal, an epidemic of flawed or fraudulent mortgage documents, threatens to send not just the housing market but the entire economy back into a tailspin (Nation, 2010).
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