The Peculiar, Diverse, and Vital Business of Personal Mortgages, 1890s–1950s

Abstract

As a source of credit on residential real estate in North America, private individuals played a vital role well into the 1950s, especially in Canada. Rare national surveys, together with varied case studies in Canada and the United States, indicate that they provided land contracts, construction loans, and first and junior mortgages to a variety of people, including family and friends and many strangers. Contacts were arranged through social networks, agents, and brokers. By comparison with major lending institutions, their role and significance have been overlooked, their loans often unrecorded. In the early decades, lenders included men and women in a range of occupations, not least because many owners offered credit to buyers to facilitate sales. By the 1950s, women, professionals, and businessmen were the main investors, the chief beneficiaries being lower-income households in less desirable districts. Some personal lenders were ill-informed or exploitive, but most enabled families to realize their aspirations to own. This sector’s decline was a consequence of federal policies that promoted national mortgage markets, making the business more professional but displacing practices that had enabled many home buyers and builders.