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Mortgage Loan Point

A mortgage loan is typically a loan that is given by a lender such as a bank or any other financial institutions to a borrower against the security of a real property. A real property is usually referred to immovable property which has a market value attached to it. A real property could involve a land or even buildings built over a piece of land.

Borrowers wishing to seek loan from a financial institution mortgage the land or a building to the bank and receive the amount of the loan. Mortgage is the legal instrument used to mortgage the property, but now the popularity of the term has led to modification in its meaning. These days, mortgage itself could refer to mortgage loan.

A mortgage loan is considered to be a secured loan because there is some tangible security arranged by the borrower against the money lent to him by the bank. In secured types of loan, there is always some collateral given to the bank by the borrower. This is different from unsecured loan, where loan is offered to the borrower without any security. Credit cards and the credit card loans are offered as unsecured loans by banks and other financial institutions.

In a mortgage agreement, there are many terms and actors involved. There is property, which is the critical security required by banks to extend loans to borrowers. The bank or the financial institution has its own definition of the property but in general terms it refers to the permanent structure, either in form land or building. This also differs from country to country, depending up how the governments have defined property.

Mortgage agreement includes the restrictions imposed by the bank over the lender. In the agreement, specifications are made that prevent the borrower from freely selling away the property during the period of loan duration. The bank keeps the property documents in its safe custody until the entire amount of the loan along with the interested is paid back by the borrower to the bank.

In secured type of loans where mortgage of property is involved, foreclosure becomes a part of the loan agreement. In foreclosure, the bank reserves the right to repossess or seize the property under certain conditions such as the borrower failing to repay the loan. It could mean loss of property to the borrower, but also a loss to the bank or the financial institutions. Borrowers in their efforts to save their property prefer to go for stop foreclosure.

Stop foreclosure ensures that the bank does not seize the property if the borrower agrees to certain conditions laid down by the bank. Stop foreclosure, of course, includes a third party intervention, which introduces the loan modification option to the borrower. It engages into negotiations between the bank and the borrower, so that both agree to certain conditions avoiding seizing of the property and also repayment of the loan through loan modification. Loan modification can include change in the rate of interest and writing off any default charges imposed by the bank.