America's Mortgage Laws in Historical Perspective

Abstract

This paper traces the history of mortgage law in the US. I explore the history of foreclosure procedures, redemption periods, restrictions on deficiency judgments, and foreclosure moratoria. The historical record shows that the most enduring aspects of mortgage law stem from case law rather than statute. In particular, the ability of creditors to foreclose nonjudicially is determined very early in states’ histories, usually before the US civil war, and usually in case law. In contrast, the aspects of mortgage law developed through statute change more frequently. This finding calls into question whether common law is inherently more flexible than the civil law system used in some other countries. However, case law tends to be less responsive to populist pressures than statute. My findings suggest that the reason common law favors financial development is unlikely to be its greater flexibility relative to law made by statute.