Ship Mortgage Act

The Ship Mortgage Act is a U.S. law that allows shipowners to use their vessels as collateral for loans, similar to how a homeowner uses their house to secure a mortgage. This act helps facilitate financing for the maritime industry by establishing a legal framework that protects lenders' interests. If a shipowner fails to repay the loan, lenders can repossess the ship. The Act provides clarity on how mortgages on ships are recorded and enforced, encouraging investment in maritime commerce while ensuring that lenders can recover their funds in case of default.