Modernizing Mortgage Law

Abstract

Modern mortgage law is designed for a world that no longer exists. The residential mortgage transaction of today looks nothing like it did during the formative period when the property laws governing mortgages were developed. What was once a local dealing between two individuals and largely for commercial or quasi-commercial purposes has now become a housing- centric financial transaction-turned-asset between multiple distant and often invisible parties that operate as part ofa national market. Yet, although the mortgage transaction has changed, mortgage law has not. Property law rules that once balanced the rights of mortgagors and mortgagees now completely fail to furnish aggrieved mortgagors with meaningful relief when faced with wrongs that stem from the complexities of the securitization of mortgage loans and the acts of intermediaries. The result is that consumers suffer wrongs at the hands of mortgage creditors and their contractors but have no remedies to right them. This is particularly true in light of the economic fallout from the COVID-19 pandemic and the threat of a coming wave of foreclosures that, if the 2008 financial crisis is any indication, promise to leave households vulnerable and completely at the mercy of the mortgage finance machine. This Article shows why an overhaul to mortgage law’s most basic doctrines is long overdue.