Mortgage, loan and property. What is a mortgage?

A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Tuesday, June 10, 2008

Another setback for U.S. households: homes seized in the last quarter grew at the highest level in nearly three decade

In the first quarter, the wealth of American households had its worst drop in more than five years.

Borrowings fell in a context where the value of houses and stock markets have dropped and where lenders have limited credit, indicate data from the U.S. Federal Reserve - the Fed.

The net worth of households has fallen by 1700 billion U.S. compared with the previous three months, the second decline in a row and the highest since the third quarter of 2002, according to a report by the Fed published yesterday. The assets related to real estate fell by 328.9 billion U.S., the highest since data began to be collated in 1952.

Another report published yesterday also indicated that the number of homes seized in the last quarter grew at the highest level in nearly three decades, indicating that the decline in the value of houses and reduced access to loans hurt the owners. A decline in consumer spending, which forms two thirds of the U.S. economy, threatens to push the U.S. into recession.

"Households continue to face difficult conditions, including a decline in home prices, a less active labor market, a tightening of credit and higher energy prices," noted this week in a speech Ben S. Bernanke, the Fed chairman.

"As long as the property market, particularly the prices of homes, do not show obvious signs of stabilization, the risks affecting growth remain," he added.

In the first quarter of this year, the net worth of owners expressed as a percentage of their total property dropped to 46.2% in the USA, the lowest level since the quarterly data began to be collected in 1951, compared to 48.9% during the previous quarter.

The Fed calculations are based on an index of home prices published by the Office of Federal Housing Enterprise Oversight. If the U.S. central bank had used a measure developed by S & P / Case-Shiller, the decline in net worth probably would have been even more marked.

The decrease in net worth property of American households from last October to December followed a decline of about 530 billion U.S. during the preceding three months. The annual rate of mortgage loans contracted by households rose by 3%, the lowest increase since 1970.

The total loans made by consumers, businesses and government agencies have grown at an annual rate of 6.5% in the last quarter compared with an increase of 7.5% over the previous quarter. Each category has declined, except loans to entities within the federal government.

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