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, April 30, 2008

Home Foreclosures: at year-end, over a million bank-owned homes in the market

RealtyTrac quarterly report on “foreclosure activity,” shows some pretty nasty numbers nationwide, as expected, with activity up 23 percent quarter to quarter and 112 percent year over year.

What is surprising is when you break down the sub-categories, you see that the number of bank-owned properties is rising faster than ever before. “Typically you’ll see about 20 percent of the foreclosure filings being bank-owned,” RealtyTrac’s Rick Sharga told in an interview this morning. “We’re getting to a point now where it’s well over 1/3 and aiming at 40 percent, so that just suggests that a lot of these homes can’t even be sold to investors at auctions” Why? Because there’s just no equity in the properties.

Some estimates that by the end of this year there will be over a million bank-owned homes in the market. That's a million of about four million properties listed on the Multiple Listing Service (MLS), so a quarter of the homes would be bank-owned. Last week a casual survey found that 18 percent of the homes on the MLS are foreclosed homes.

It is very interesting, with all the programs supposedly helping owners in default and all the banks claiming that they are doing what they can to help them, a growing number of homes are still going back to the bank.