This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Transfers of land as security for a debt assumed, in early times in England, various forms, among which was the mortuum vadium, from which has been derived the term "mortgage." The mortuum vadium was so called, it seems, owing to the fact that, upon its creation, the beneficiary became entitled to the rents and profits of the land, and consequently the land was "dead" to the debtor, while by the form of transaction known as the vivum vadium, the profits of the land were applied on the debts. Both these forms of security eventually gave place to what is known as the "common law mortgage," consisting of a feoffment subject to a condition that, on payment by the feoffor (the debtor) of a sum named, at a certain time, he might re-enter, thereby terminating the feoffee's estate.1
A strict compliance with the condition of a common law mortgage was insisted upon by the courts of law, which refused to consider that the conveyance was intended merely as security for a debt, and they treated the estate of the mortgagee as indefeasible if the condition was not promptly performed by the mortgagor. Consequently, land was often forfeited for a debt much less than its value.2 The court of chancery, however, quite early showed a disposition to relieve against this hardship, and about the middle of the seventeenth cen-turv it became the settled doctrine of that court that the debtor, by paying the debt even after it became due, could recover the ownership of the land, that is, could "redeem," his right so to do being known as his "equity of redemption."3
1. Litt. Sec.Sec. 332-344. See Digby, Hist. Real Prop. 282; Coote, Mortgages, (8th Ed.) 1-3.
The early "gage" of land had much more the characteristics of the modern mortgage, as developed in equity, than the common-law mortgage of the time of Littleton. See Glanville, bk, 10, c. 6; 2 Pollock & Maitland Hist. Eng. Law, 117-123; The Story of Mortgage
Law, by H. W. Chaplin, Esq., 4 Harv. Law Rev. 1; The Gage of Land in Mediaeval England, by Harold D. Hazeltine, 17 Harv. Law Rev. 549, 18 Id. 36, reprinted 3 Select Essays Anglo-American Legal History, 646.
2. Litt. Sec.Sec. 332, 337; 4 Kent's Comm. 140; Williams, Real Prop (21st Ed.) 546.
3. How v. Vigures, 1 Rep. Ch.
Since, unless some restriction in respect of time was placed on this right of redemption, the creditor to whom the mortgage was made, known as the "mortgagee," might be forever deprived of the right to recover his money, the court of chancery allowed this right of redemption to be put an end to by a decree of "foreclosure," granted upon the bringing of proceedings for the purpose, the right of redemption being thereby cut off or "foreclosed," unless the debt was paid by a time named in the decree.4
Somewhat later, chancery, regarding the real purpose of the transaction, adopted the view that the mortgagor, in spite of his conveyance by way of mortgage, is still the owner of the property, with all the rights of an owner, so far as this may be consistent with the security of the mortgagee, and that the latter has, for most purposes, merely a lien or charge upon the land to secure his debt.5 After the position of the mortgagor as owner was thus established in equity, the term "equity of redemption," which had previously and most appropriately been applied to his right to redeem, was applied, somewhat inappropriately, to this entirely distinct right of ownership, and at the present day the term, though used in both senses, more frequently describes the interest of the mortgagor in the land than his right to redeem after default.