The Enduring Legacy of Populism: A Brief History of America’s Mortgage Laws
Andra C. Ghent
Arizona State University (ASU) - Finance Department
October 10, 2013
Differences in mortgage laws across US states result in substantially different economic outcomes. This paper traces the history of mortgage laws in the US to better understand the reasons for the differences in state foreclosure laws. I explore what led states to adopt different foreclosure procedures, to have different redemption periods, to restrict deficiency judgments, and to follow title or lien theory. There is not an obvious geographic pattern in which states historically or currently use non-judicial foreclosure as the usual method to foreclose. However, an examination of the historical case law and statutes reveals populist influences as likely reasons for restrictions on non-judicial foreclosure. When mortgage laws evolved in tandem with substantial farm mortgage distress and out-of-state credit, states restricted creditors’ access to non-judicial foreclosure. I also find quantitative evidence that states that experienced more farm foreclosures and that were more reliant on out-of-state credit in the early 1930s are more likely to have tried to ban deficiency judgments.
Number of Pages in PDF File: 45
Keywords: Mortgage History, Great Depression, Property Rights
JEL Classification: G21, G28, K11, N21, N22, R30working papers series
Date posted: October 25, 2012 ; Last revised: October 14, 2013
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