PT Journal
AU Berman, AR
TI "Once a Mortgage, Always a Mortgage"  The Used (and Misuse) of Mezzanin Loans and Preferred Equity Investments
SO Stanford Journal of Law, Business & Finance
JI Stanford Journal of Law, Business & Finance
PY 2005
IS 76
LA English
DE Credit; Loan; Mortgage; Mezzanine; Preferred Equity Investments
AB Since the beginnings of English common law, property owners have used the mortgage as the principal instrument to finance real estate acquisitions, provide l iquidity, and raise additional capital . 1 And if a first mortgage proved insufficient, the owner simply borrowed additional funds secured by a second mortgage on the same property. Although the mortgage first developed in agrarian England to finance acquisitions of farmland,2 over the centuries it has proved particularly adept at satisfying the financial needs of owners with all types of real property.To this day, the mortgage remains one of the most common and successful techniques to finance both residential and commercial real estate transactions in the United States.3 As the mortgage market continued its exponential growth over the last 25 years, however, a new (and soon to be powerful) real estate financing technique also emerged. This technique first involved the active trading of whole mortgage loans4 on the secondary mortgage market5 and later the securitization of large pools of mortgage loans.6 At first these securi tizations consisted almost entirely of residential mortgage loans (Residential Mortgage Backed Securitizations or RMBS). 7 As the industry matured, however, mortgage securitizations also soon included pools of commercial mortgage loans (Commercial Mortgage-Backed Securitizations or CMBS).8
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