Bad mortgages are in the news quite a bit these days. How about vivgages? Meir Kohn’s The Capital Market Before 1600 sheds some etymological light on arcane financial terms:
Landowners had a major advantage in issuing long-term debt — the ability to secure it with land. Under Roman law there were two ways to do this. In a pignus or pawn, the property that secured the loan passed into the hands of the lender, to be returned on repayment of the loan. In a hypothec, the property remained with the borrower, but could be seized by the lender if the borrower defaulted.The two arrangements differed principally in who bore the burden of suing for possession in the event of a dispute: in the first case, it was the borrower; in the second, it was the lender. Under feudalism, ownership of land became intertwined with lordship, so that courts rarely upheld a lender trying to seize land from a defaulting borrower. As a result, lending against land generally took the form of a pignus rather than a hypothec. In such a land-pawn, the income from the land — whether in the form of produce or of cash — went to the lender who was in possession of the land.
In one variation, the vivgage or live-pledge, the income counted against the outstanding principal, and the lender returned the property as soon as the loan was fully repaid. In a mortgage or dead-pledge, the income did not count against the principal but compensated the lender for making the loan; repayment of principal was due after a predetermined number of years, and if the borrower defaulted, the land became the property of the lender. Not surprisingly, the mortgage was more popular with lenders and less so with borrowers.