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.

Thursday, July 10, 2008

Home selling: Resales of houses lower than expected in the U.S.

The contracts to buy existing homes in the USA have declined more than expected in May, a sign that prices are still declining (after more than two years) and have not yet reached their level.

The index of resales of homes under negotiation fell to 4.7% following a revised gain of 7.1% in April, a result better than what was indicated previously, said yesterday in Washington the National Association of Realtors.

The prospect of even higher lower prices (or should I simply say of still lower prices), this prospect is likely to discourage bids while mortgage rates are rising and it is more difficult to obtain loans, whose conditions have become more demanding.

The record number of defaults on mortgage raised concerns that Fannie Mae and Freddie Mac, the two largest U.S. mortgage financing, from being forced to increase their capital another 75 billion U.S.

"The houses are much more affordable, but they will probably even be more in six to twelve months, so that people are reluctant to plunge immediately," says Nigel Gault, chief economist at Global Insight Inc., Lexington, Massachusetts.

During an interview with Bloomberg Television, Mr. Gault said: "The message is that the big rise last month was not a sign that the market was being reversed. We had a big correction this month."

Economists had expected the index resales of houses being negotiated would decline by 3%, according to the median forecast of 38 economists surveyed by Bloomberg News.

Resales of houses under negotiation fell by 14% compared to home selling in May 2007, according to the report published yesterday.

The index was declining in all regions of the U.S., and the worst decline, or 7.1%, was in the South. Resales of houses under negotiation fell by 6% in the Midwest, 2.9% in the Northeast, by 1.3% in the West. Compared with a year earlier, the signatures of the contract were up 2% in the West when they were down in other regions.

The report on resales of houses under negotiation is considered a key indicator because it bears the signatures on the contract.

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