Thursday, March 15, 2012

The Death Pledge

American's love the idea of owning their home. So much so that their are now approximately 44.5 million Americans with mortgages. At face value this looks like a great concept but when you dig a little deeper and uncover the history of the concept, it begins to look a lot less appealing.
The word "mortgage" comes from Old French : mort, dead and gage, pledge (of Germanic origin).] Essentially a mortgage is a death pledge. Seems fitting.
According to Wikipedia, the great jurist Sir Edward Coke, who lived from 1552 to 1634, explained why the term mortgage comes from the Old French words mort, "dead," and gage, "pledge." It seemed to him that it had to do with the doubtfulness of whether or not the mortgagor will pay the debt. If the mortgagor does not, then the land pledged to the mortgagee as security for the debt "is taken from him for ever, and so dead to him upon condition.
Given the current arrangement it is rarely expected that those who hold a mortgage are ever expected to really pay it off. Till death do we part. Nowadays mortgages are often passed on to future generations for them to deal with.
Perhaps it is time to rethink this death pledge and come up with an arrangement that does not require us to make such a radical promise to a multi-national corporation who is more than happy to evict us from our homes if economic or health related challenges cause us to miss a few payments.

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