These concern, first, the common law, statutory and regulatory rules to protect the mortgagor (i.e. the borrower) at the time of concluding the mortgage agreement.
It has never been subjected to systematic statutory reform, and over centuries of gradual evolution it has acquired a multi-layered structure that is historically fascinating but inappropriately and sometimes unnecessarily complicated.
"[3]Slightly more pithily, Lord Macnaghten once commented in a judgment: "no one, I am sure, by the light of nature ever understood an English mortgage of real estate.
However, on the stated day for redemption the mortgagor had to pay the full amount of the debt, otherwise they would lose their right to redeem and the land would belong to the mortgagee absolutely.
They held that a mortgagee in possession had to account for all rents received on the property,[7] and provide a degree of protection where the mortgagor was late in repaying the loan.
However, by the Victorian era mortgages of personal property were sufficiently widespread that the legislature enacted the Bills of Sale Acts to try and regulate this area of the law.
Along with pledges, liens and equitable charges, English law counts a mortgage as one of four main kinds of security interest, whereby a proprietary right that binds third parties is said to arise on conclusion of a contract.
The reason for this reference to "3000 years" is that in a primitive protective measure, the common law said mortgage terms must always allow for the property to be redeemed in the end, when the debt is repaid.
Given the considerable interest paid already, Lord Henley LC held it would frustrate (or "clog") Vernon's right to redeem property.
[17] The House of Lords agreed that undue influence would make a contract voidable, and if a bank should have realised this possibility, it could not enforce the mortgage agreement against the spouse's share of the home.
Accordingly, if banks wished to ensure valid mortgages they would need to have confirmation from an independent solicitor that the spouse fully understood the transaction.
Alternatively, if despite independent advice, a spouse is still unduly influenced or is misrepresented the facts, he or she will have no recourse against a bank selling the home, but may have a claim against the solicitor for negligence.
The general thrust of the law is to ensure complete transparency, and to cancel extortionate credit agreements, so that consumers know what they are getting, and do not get an unfair bargain.
The Privy Council advised that while delay in the claim meant the sale should not be set aside, damages could be awarded because of the significant conflict of interest.
[26] Regarding dwelling-houses and court issued possession orders, the court has the power to adjourn proceedings, and suspend or postpone an order of possession, if it is satisfied "that in the event of its exercising the power [of adjournment, suspension or postponement] the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or to remedy a default consisting of a breach of any other obligation arising under or by virtue of the mortgage".
In a more borrower-friendly decision, Cheltenham & Gloucester Building Society v Norgan[30] Waite LJ gave guidance that in ordering a plan for repayment, a judge should give "the period most favourable to the mortgagor at the outset", so that repeated applications to court on continuing defaults could be avoided, and so that "the mortgagee can be heard with justice to say that the mortgagor has had his chance".