WHAT IS A MORTGAGE? NON-POSSESSORY PUBLIC PLEDGE OF RESIDENCE ACCESSORY TO LOAN CREDITOR PRIORITY OVER UNSECURED CREDITORS AND LATER SECURED CREDITORS PREVALENT FORM OF HOUSING FINANCE IN DEVELOPED ECONOMIES

WHY IS MORTGAGE IMPORTANT? HIGHER LOAN AMOUNTS COLLATERALLOWER INTEREST RATES MORE LENDING

WHAT IS THE PROBLEM? DELAYS IN REALIZATION OF COLLATERAL EXPENSE LOST PRINCIPAL AND INTEREST PROPERTY DETERIORATION LACK OF CERTAINTY REGARDING PROPERTY RIGHTS AND PRIORITIES – NO REGISTRATION SYSTEMS

PREREQUISITE – REGISTRATION ASSURANCE OF THE OWNERSHIP RIGHT (RIGHT TO MORTGAGE) IDENTIFICATION OF CONFLICTING INTERESTS ASSURANCE OF MORTGAGE PRIORITY A MAJOR BARRIER IN EMERGING MARKETS

DIFFERENCES AMONG LEGAL SYSTEMS? SOME SUBSTANTIVE AND PROCEDURAL DIFFERENCES BETWEEN CIVIL AND COMMON LAW SYSTEMS ARE THE DIFFERENCES MATERIAL? EFFICIENT MORTGAGE ENFORCEMENT IS FOUND IN BOTH COMMON AND CIVIL LAW SYSTEMS AS MUCH VARIATION WITHIN SYSTEMS AS BETWEEN TECHNICAL LEGAL DIFFERENCES PROBABLY LESS IMPORTANT THAN CULTURE AND JUDICIAL ATTITUDES

MORTGAGE ALTERNATIVES MORTGAGE BY DEED, LEASE-PURCHASE, INSTALLMENT SALE CREDITOR HAS LEGAL TITLE – AVOIDS COMPLEXITIES OF MORTGAGE LAW DEBTOR MAY LOSE ALL PROTECTIONS OF MORTGAGE LAW, INCLUDING RIGHT OF REDEMPTION; DEPENDS ON THE COURTS ARE THEY USEFUL? ONLY IF YOU DON’T HAVE A GOOD MORTGAGE LAW

RELATED DEVICES LAND CHARGE MORTGAGE NOTE/CERTIFICATE BENEFIT – EASE OF TRANSFER; AVOID REGISTRATION COSTS AND DELAYS AN ISSUE MOSTLY IN TITLE REGISTRATION SYSTEMS

PROCEDURAL ISSUES NON-JUDICIAL ENFORCEMENT - ARGUABLY THE SINGLE MOST IMPORTANT STEP TOWARDS EFFICIENCY CAN NON-JUDICIAL ENFORCEMENT BE WELL REGULATED? MOTIONS, CONTINUANCES, AND APPEALS STATE AND COURT ORGANS OF EXECUTION

ALTERNATIVES TO ENFORCEMENT FORBEARANCE GUARANTEE COMMON MORTGAGE INSURANCE?

MINIMIZING ENFORCEMENT UNDERWRITING DISCLOSURE HOUSING COSTS

CREDITORS’ CHECKLIST Flexible Legal Concept Efficient and Cost Effective Creation Broadly Defined Obligation Good Registration System and Procedures Transferability Bankruptcy protections Enforcement: Avoid Courts Simple prima facie case Negotiated acquisition Negotiated sale Clear and realistic pricing formulas, limited liability Limited judicial discretion Limitations on appeal Quick possession

DEBTORS’ CHECKLIST Transparency of transaction Reasonable costs Sale, refinancing, prepayment Notice and cure period Rights of appeal Possibility of forbearance Protection of investment: Price Maximization Market based pricing Official oversight Right to object Penalties for unfair pricing Low execution costs Accounting