A mortgage is an agreement between a home or property buyer and a lender that gives the lender the right to take property if the buyer neglects to make payments or repay the money they’ve borrowed plus interest.[1] . Mortgage loans may be used to finance a new home or borrow against the value of a home that is already owned.
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History of mortgages in the United States
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Mortgages today are different than in the past. For example, “prior to 1930 the federal government was not involved in the mortgage market.”[2] Prior to the 20th century, perspective homeowners would need to seek out private financing, such as money from an individual, a family member, or through a building and loan association. Where did consumers not acquire mortgages? Banks. “The National Bank Act of 1864 barred commercial banks from writing mortgages, but life insurance companies and mutual savings banks were active lenders.” [2] However, there were some drawbacks to that option since they were heavily regulated regarding who they could lend to.
If a borrower was using a building and loan association to acquire a mortgage, how did that work? According to the Federal Reserve Bank of Richmond[2]:
"B&Ls commonly used what was known as a "share accumulation" contract. Under this complicated mortgage structure, if a borrower needed a loan for $1,000, he would subscribe to the association for five shares at $200 maturity value each, and he would accumulate those shares by paying weekly or monthly installments into an account held at the association. These payments would pay for the shares along with the interest on the loan, and the B&L would also pay out dividends kept in the share account. The dividends determined the duration of the loan, but in good economic times, a borrower would expect it to take about 12 years to accumulate enough money through the dividends and deposits to repay the entire $1,000 loan all at once; he would then own the property outright.
…B&Ls had been operating mainly in the Northeast and Midwest until the 1880s, when, coupled with a lack of competition and rapid urbanization around the country, their presence increased significantly. In 1893, for example, 5,600 B&Ls were in operation in every state and in more than 1,000 counties and 2,000 cities. Some 1.4 million Americans were members of B&Ls and about one in eight nonfarm owner-occupied homes was financed through them. These numbers would peak in 1927, with 11.3 million members (out of a total population of 119 million) belonging to 12,804 associations that held a total of $7.2 billion in assets.
Despite their popularity, B&Ls had a notable drawback: Their borrowers were exposed to significant credit risk. If a B&L's loan portfolio suffered, dividend accrual could slow, extending the amount of time it would take for members to pay off their loans. In extreme cases, retained dividends could be taken away or the value of outstanding shares could be written down, taking borrowers further away from final repayment."
The Great Depression was not only a time of economic hardship but also led to changes in how potential homeowners could secure funding. The federal government joined the world of home financing to reform the way borrowers secured funding.
Mortgages in genealogical research
When we think of genealogically relevant records, mortgages are not something genealogists seek out when researching their ancestors land and property because of the lack of availability. However, it is possible that mortgage documents may be found with other land and property records or as a home source. Keep in mind that earlier mortgage documents may not look like a mortgage document we are familiar with today because the mortgage could have been financed by an individual, including a family member.
Mortgage records can contain the following genealogical relevant information:
- Name
- Address of home or property
- Possible family relationships such as spouse or child.
In some cases, mortgage records can be found in land and property collections on genealogy websites. To find mortgage records, conduct a keyword search on online genealogy catalogs for possible records. County archives may also have relevant land and property records.
References
- ↑ "What is a mortgage?," Consumer Financial Protection Bureauhttps://www.consumerfinance.gov/ask-cfpb/what-is-a-mortgage-en-99/
- ↑ 2.0 2.1 2.2 “A Short History of Long-Term Mortgages,” Federal Reserve Bank of Richmond https://www.richmondfed.org/publications/research/econ_focus/2023/q1_economic_history
See also
Explore more about mortgages
- Netherlands, Notarial Records, 1600-1935 collection at MyHeritage
- Sharecropping Contracts, Chattel Mortgages and Trust Deeds webinar at Legacy Family Tree Webinars
- The Lure of the Land: 4 Types of Land Records That Can Help Solve Genealogy Brick Walls
- 12 Essential Genealogy Clues in Land Records