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 17, 2008

Bernanke: Fannie Mae and Freddie Mac are not in danger

The refinancing of mortgage giants Fannie Mae and Freddie Mac are "not in danger of default”, has assured Washington Wednesday to the chairman of the U.S. Federal Reserve, Ben Bernanke.
The central bank and the Treasury Department intervened Sunday to save the two institutions, weakened by the crisis in property loans and rumours about their financial health.

The plan enables the two companies to borrow money at the same rate that commercial banks and large financial institutions on Wall Street.

The Treasury is considering meanwhile of upping its line of credit and invest in these two pillars of the U.S. mortgage market if necessary.

But Treasury Secretary Henry Paulson said Tuesday that the plan was intended to be implemented only when and if needed. Any financial support from the Treasury will be "under conditions that protect the American taxpayer," he assured.

To save Fannie Mae and Freddie Mac, which hold or guarantee $ 5300 of real estate mortgages, representing about half of all the USA, President George W. Bush, called on Congress Tuesday to quickly adopt another plan that provides for the modernization of the federal government's property management.

He also called for the creation of a new governor and tighter controls on Fannie Mae and Freddie Mac.

President Bush has, however, sought to reassure public opinion. "I think the system is fundamentally sound" he said.

Fannie Mae and Freddie Mac are "adequately capitalized," said Wednesday Mr. Bernanke, although the lack of "market confidence has an effect on both companies, which have difficulty raising capital”.

Like he said earlier at his hearing before the Senate Banking Committee, the chairman of the central bank has again highlighted the current difficulties of the U.S. economy: crisis in the property market, market volatility, high energy prices and food.

The tightening of credit conditions may have negative consequences for growth in 2008. As for inflation, it remains high and it is "likely" to increase again, "temporarily" in the next quarter, he explained Tuesday.