Mortgage
Aiton's Encyclopedia (1910)
mor'gaj, a sale of property to secure the payment of a debt. It is coupled with the express provision that, if the debt be paid, the sale is not in force. A mortgage may convey personal property or real estate , that is to say, either movables or land. In either case the mortgagee, or person to whom the mortgage is given, is required by law to sign a release, or discharge, in case the mortgage is paid. In case of non-payment he is required to give usually a year's notice, and to advertise before the property becomes his by mortgage sale. A mortgage differs from pawning or pledging in that the property stays in the hands of the one who signs the mortgage until the debt is overdue and the mortgage foreclosed. One of the most common forms of mortgage is one given on a farm or a house in part payment of the purchase price, or to enable the owner to make improvements. Mortgages are a favorite form of investment in this country and are the resort of borrowers in great numbers. The taxation of mortgages is a vexed question. The mortgager is required to pay taxes on the property mortgaged; but the mortgagee, whose interest may be much the greater, has many ways of escaping. A common method of evading taxation is to have the mortgage run in the name of some person not resident in the state. The only feasible method of taxing mortgages is that of requiring them to be recorded in order to be valid and then of exacting a recording fee. Lawmakers, too, are afraid of driving out money and of raising the rate of interest by a high rate of taxation. New York charges a recording fee of one-half of one per cent per annum. Minnesota charges a flat recording fee of one-half of one per cent. The tax on $5,000 drawn for three years is therefore $75 in New York and $25 in Minnesota.
What Has Changed in the Last Century
The legal skeleton Aiton's described in 1910 is still recognizable elease on payment, foreclosure on default am but the loan itself is a different animal. The mortgage of 1910 was typically a short-term balloon loan, often five years or less, interest-only, for perhaps half the value of the property, renewed again and again; the long-term fully amortizing loan that Americans now think of as a mortgage was a product of the Depression, spread by the Home Owners' Loan Corporation of 1933 and the Federal Housing Administration of 1934, with Fannie Mae founded in 1938 to buy such loans. Two other things Aiton's could not foresee: mortgages are now bundled into securities and sold worldwide, a trade whose collapse in 2007-08 triggered a global financial crisis, and most states now treat a mortgage as a lien on property rather than, as the entry puts it, "a sale of property." The "vexed question" of taxing mortgages largely resolved the other way am the federal income tax now subsidizes home borrowing through the mortgage interest deduction am though New York still levies a mortgage recording tax.
Written for this edition, 2026.