Hypothecation -- the practice and the term -- is alive and well in such positively British venues as the London money market; see link below. (The spectacular failure of Lehman Bros. a few years back made a huge regulatory issue of 're-hypothecation', a term few in the general public had ever seen before then.)

Hypothecation under civil or common law is not the same as mortgaging. That said, it is true that 'prets hypothecaires' and 'mortgage loans' are used everywhere as reciprocal translations, and this is defensible on grounds of functional and cultural equivalence in the *usual context* of real property finance.

There is no hint of that context here. Stick with 'hypothecate'. Furthermore, in a context that does talk, quaintly, about 'law or letters patent', I see no reason to shy away from word forms invoking 'power'.

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Note added at 1 day2 hrs (2014-11-10 17:21:32 GMT)
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"The uneven burden of the current council tax system, the complex and stepped nature of stamp duty and other real estate taxes points to the need for change. Even the London Mayor, Boris Johnson, is calling for London’s stamp duty revenue to be hypothecated for the use of the city."
6 November 2014, Yolande Barnes, Savills UK
http://www.savills.co.uk/research_articles/141558/183869-0



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Note added at 1 day3 hrs (2014-11-10 17:49:30 GMT)
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Financial Times Lexicon:
hypothecation The pledging of assets as collateral to secure a loan.