Florida Endwoment Mortgage
In Florida, as in many other places an endowment mortgage is a mortgage arranged on an interest-only basis where the capital is intended to be repaid by one or more endowment policies. The phrase endowment mortgage is used mainlyby lenders and consumers to refer to this arrangement and is not a legal term.
The borrower has two separate agreements. One with the lender for the mortgage and one with the insurer for the endowment policy. The arrangements are distinct and the borrower can change either arrangement if they wish. In the past the endowment policy was often taken as additional security by lender. That is, the lender applied a legal device to ensure the proceeds of the endowment were made payable to them rather than the borrower; typically the policy is assigned to the lender. This practise is uncommon now.
Why have an endowment mortgage
The customer pays only the interest on the capital borrowed, thus saving money with respect to an ordinary repayment loan; the borrower instead makes payments to an endowment policy. The objective is that the investment made through the endowment policy will be sufficient to repay the mortgage at the end of the term and possibly create a cash surplus.
Critisism of endowment mortgages
In the stock market boom of the 1980s and 1990s it seemed plausible that at the end of the loan term, the investment would pay off the capital and leave a surplus for the customer to spend.
However, the stock market crash of the late 1990s showed that endowment mortgages were a gamble: they relied on stock markets growing faster than bank lending rates, and so transferred significant risk from the lenders to the borrowers.
The high-pressure sales of endowment mortgages to people who didn't understand the risks they were taking, or for whom the product was unsuitable, was ruled by the courts in many cases to be "mis-selling", and many banks have been forced to restore their customers to the financial position they would have been in had they taken out a repayment mortgage instead. | 
