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.

Wednesday, June 25, 2008

Consumer Confidence Drops (again) and Home Prices Drops (again)

Did consumer confidence drop (again) because of the home prices drops (again), or did the home prices decline because of the falling consumer confidence?

The American consumers hit by falling home prices and elevated gasoline prices are at their darkest for decades, raising fears that they could reduce spending later this year and bring the economy into a recession.

Consumer confidence droped in June to its lowest level since 1992, and house prices declines accelerated in April, according to data released Tuesday. The renewed signs of economic weakness highlighted why Federal Reserve policymakers, who wrap a two-day meeting Wednesday, are likely to keep the objective of their benchmark interest rate unchanged at 2%.

Expectations of consumers in the economy for the next six months fell to the lowest level since the Conference Board (based in New York) began to conduct its investigations in 1967.

The economic slowdown last year was led by the collapse of home construction and flattening business investment. But growth has remained slightly positive: The economy grew by 0.9% annual rate in the first quarter of this year and should post a similar gain in the current April-June. It is in large part because consumers, whose spending represents two-thirds of the economic output of the USA, have resisted.

But the most recent evidence the collapse of their confidence combined to falling house prices suggests that Americans' willingness to keep spending is being tested, and the chances of avoiding contraction of the economy have fallen.

Following home prices

Do you think house prices in your area have yet hit bottom? The S & P / Case-Shiller index shows a greater decline in prices in part because it follows the metropolitan areas where prices are more responsive than in rural areas. Ofheo, on the other hand, May underestimate the weakness, because it tracks so-called agency-backed mortgages, which leaves out houses purchased with subprime loans.

Both surveys show that lower prices vary widely across regions. Las Vegas and Miami continue to be the largest drops (over a year span) of 26.8% and 26.7% respectively. Los Angeles, San Diego, San Francisco and Tampa, Florida, have also experienced a decline of over 20%, according to the S & P / Case-Shiller data.

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