Sub prime mortgages are the main cause of this meltdown and as it turns out, some people already fear loosing their homes due to foreclosure.

Canadian banks have to pay with their noses by selling homes of individuals who cannot plainly repay their loans. Home owners, realtors and agents are badly beaten with the situation.

With the current world recess few Americans have wonderful homes. Whether you irk a living in New Brunswick or somewhere in Newfoundland, hard truth is that, real estate players are gripped with horror stories of loosing their homes.

Mortgage loan are not offered that easily anymore and for acquiring home loans the customers once again have to prove their credit histories. There was a time when each eligibility requirement had become very thin and this of course resulted in the Sub-Prime doom.

Thankfully, FHA and other government initiatives have tilted the balance a little in favor of aspiring homeowners. Now, more than ever before, there is a sense of empathy for the homeowners who have been standing at the receiving end of other defaulters’ ill-work. Home loans are now at least within the reach of those who need it at this hour of crisis.

There are generally three things associated with a home loan; the rate of interest, down payment and the mortgage structure. Earlier, the down payments were near zilch and the rate of interest offered was low as well. Also, the mortgage structure provided was lenient and people could handle it.

Presently, the norms have become stricter and this is leading to a greater number of short sale and foreclosures. These two processes are considered a great pain for homeowners. In the event of not being able to pay a home loan mortgage or a modified loan structure, the property is being foreclosed. This means that the lender has all the rights on the property from then onwards and this in itself is a painful process for the homeowner.

Short sale implies a property sold beneath the thresholds and the proceeds of the sale go directly to the lender. The price of the property may not be able to fulfill the mortgage obligations of the lender and this then is benefit to homeowner. Such reprieve is the whole idea behind Short Sale.

Mortgage loan can also take the course of home loan modification. This happens when a mortgage broker or a Stop Foreclosure specialist finds out that a mortgagor has enough resource to tackle a lenient mortgage structure. He then either gets the interest rate lowered or shuffles the monthly mortgage or distributes the loan tenure over a greater period of time. This way, a property is saved from being foreclosed or put up on a Short Sale.

In case of housing loans, continuing security of a residential building mortgaged to the bank is accepted provided the value of the property is sufficient to cover the liability of the housing loan with prescribed margin and the applicable interest charges.

A mortgage is a form of hypothecation of the property. The loan can be secured by either an equitable mortgage, mortgage by way of memorandum of entry or by a registered mortgage, The type of mortgage differs from one bank to another, depending upon the loan amount, value of property, customer profile etc.

An equitable mortgage is created by way of deposit of title deeds. The ownership documents of the property are deposited with the bank. No formal mortgage deed is executed. This is by far the simplest and cheapest form of mortgage.

In case of mortgage by way of memorandum of entry, the borrower has to sign a declaration stating the he is mortgaging the property to the bank. This declaration is entered in the memorandum of entry of mortgage which can be enforced by the bank in case of default in the repayment of the loan.

In contrast to both of these, the registered mortgage is the safest form of mortgage. This is also referred to as the English mortgage. No documents of the property are required to create an English mortgage. The borrower has to enter into a mortgage deed with the bank. This deed is then stamped and registered in order to make it enforceable.

This is an expensive mode of creating a mortgage. The stamp and registration charges have to be borne by the borrower. The borrower binds himself to repay the money as per the agreed schedule and transfers property absolutely to the mortgagee (bank) subject to the condition that the bank will retransfer the property back to the mortgagor.

Once mortgaged, the borrower cannot sell or transfer it to anyone else without the consent of the bank. While purchasing a property, the purchaser should also do a due diligence exercise and visit the registrar’s office to see any prior encumbrances to the property planned to be purchased to him.

Additional Security

In addition to the mortgage of the property, additional security may have to be rurnished under these circumstances:

In addition to the mortgage of the property, additional security may have to be rurnished under these circumstances:

• Where mortgage can not be provided or is inadequate

• Where the house is under construction

• Loans to allotees of flats / houses built by state housing development authorities or members of cooperative housing societies

Normally banks and financial institutions prefer to have the first charge on the property. In case the purchaser has availed of a loan from more than one bank or financial institution, a pari passu charge may be created in favor of the lenders. However this usually applies of large projects. In case of a pari passu mortgage, if there is a default in repayment, all the lenders share a right on the property as per the proportions of the loan amount disbursed by the banks and other financial institutions.