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.

Friday, September 19, 2008

Financial crisis: What will the impact be on American families?

Investors see with a good eye the rescue plan set up by the American authorities to cope with the stock market crisis, but what will be its impact on American families?

This morning, George W. Bush has sought to reassure the population. "Significant amounts of taxpayer dollars are at stake," admitted the American president. However, he added: "we expect that this money will be repaid."

Washington's plan aims to buy the assets of dubious banks.

It could cost the U.S. taxpayer "hundreds of billions of dollars," said Henry Paulson. Nevertheless, it’s cheaper to American families than a series of bankruptcies of financial institutions, said the U.S. Secretary of Treasury.

Wednesday, September 17, 2008

The construction of new U.S. homes fall by 6.2%

The construction of new homes fell in August to its lowest level in more than 17 years in the U.S., according to figures announced Wednesday by the Department of Commerce.

In total, 895 000 new housing units were constructed in August, on an annualized basis, representing a fall of 6.2%.

This is the lowest figure since 1991, proof of the magnitude of the real estate crisis that continues to weaken the U.S. economy.

Analysts expected a decline of 1.6%. The home crisis is far from over.

Sunday, September 14, 2008

Unexpected decline in retail sales in August

Retail sales in the U.S. have accused an unexpected decline of 0.3% in August, and fell for a second consecutive month after the revised 0.5% number in July, according to data released Friday by the Department of Commerce .

Economists polled by Reuters and Bloomberg were expecting an average of 0.2% increase in retail sales.

Sales of cars and auto parts rose by 1.9% last month, which is their first increase since January.
Excluding the auto sector, retail sales reflected a decline of 0.7%, against -0.2% which was due.

The gasoline sales fell by 2.5% last month - their biggest monthly decline since mid-2007 - after rising 0.2% in July.

With all those negative numbers and both Fannie Mae and Freddie Mac being in the hands of the government, one is wondering if the Mortgage market will come back to more reasonable terms.