Mortgages On Properties Practised In U.S.

The term “Mortgage” legally means a method of using property (real or personal) as security for the payment of a debt. The legal device used for this purpose is “Mortgage” but is commonly used to refer to the debt secured by the mortgage, namely the mortgage loan.

Mortgages are usually associated with loans secured on real estate, rather than other property. Arranging a mortgage is the standard method by which individuals and businesses can purchase residential and commercial real estate, without the need to pay the full value immediately. In the United States this mortgage lending is very much prevalent.

Mortgages in the United States:

Two types of mortgage instruments are used in the U.S. – the mortgage and the deed of trust. A mortgage creates a lien on the title to the mortgaged property, requiring judicial proceeding for foreclosure of the debt in default or the recovery of it.

The deed of trust is a deed by the borrower to a trustee for the purpose of securing a debt, merely creating a lien on the title and not a title transfer. It can be foreclosed by a non-judicial sale of the property by the trustee in case of default of repayment. The foreclosure process in this instance is much faster and less expensive.

Foreclosures – the process and their effects:

Foreclosure is the legal proceeding in which a bank, government authority or other secured creditor sells or repossesses an immovable property (housing property or commercial property) due to the owner’s failure to comply with the terms of mortgage or deed of trust by defaulting the repayment ensured by the document. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or lien on the said property.

The effect of such foreclosures is the property is sold by auction, normally starting from a cut off price and disposed off without much loss of time, so as to regain the amount of principal lent by the lender to the borrower. Here the important point to be taken note of is the same property will be fetching a greater market value, if it is sold by the owner by normal sale. But the lender is keen in regaining his original investment only and so these properties can be acquired by others – either for their own use or as an investment – at a very cheap price. More or less this is a distress sale.

Those who are aspiring to buy a housing property in a prime location should invariably consider first this lucrative opportunity of buying foreclosure properties to derive the maximum benefit. Most of the properties will be in a good and saleable condition only and the buyers need not have any apprehension over this. It should be understood that this is an easy way of acquiring good properties at an affordable price, below the market rates. Towards purchase of such foreclosure properties all the relevant details of the properties, their location, illustrative photos, facilities nearby and the prices at which they are offered are all readily compiled and available to any one who visits

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