No sane person wants a mortgage, what we want is to own our own property. A mortgage is a credit agreement that ties the borrower into a long term agreement meaning they end up paying back 2 or 3 times the amount borrowed, or more, over twenty or more years. Additionally, many mortgage agreements only pay interest over the loan term and the borrowed amount is still payable at the end of the loan term.
Repayment mortgages, pay back interest and capital over the loan period, consequently the monthly repayments are much higher than an interest only style mortgage.
Like all other forms of loans and credit the mortgage is based on fraud and deception on the part of the loan company, for all the same reasons. The process is slightly different, hence it is being covered separately. Paperwork is signed by both parties and from the person applying for the loan is created the promise to pay (IOU) used by the mortgage company to create the amount of the loan as an entry on a computer screen (asset). Where a mortgage agreement differs, is that the IOU is then sold off to a bonding company. This bond is then subject to speculation in the derivatives market, or by hedge funds, which is what happened in the US sub-prime market, leading to the collapse of Northern Rock and other banks and almost total economic collapse, but for the bailouts. A “demand deposit instrument” (an escrow account) is created in the name of the borrower (unknown to the borrower) which has a value assigned into it, equivalent to the value of the loan. If the money in the escrow account is unclaimed by the borrower (who is unaware it exists) for 3 years, it is then claimed by the lender through maritime salvage law (lost at sea). At that point the lender is then able to use that recovered money as a reserve, and using the fractional reserve process explained previously to loan out nine times that value in additional loans. Only when the total debt (principal) amount is repaid is the liabilities side of the double entry ledger balanced and the account closed.
Mortgage lenders typically retain the property deeds of the house as surety, in addition to the IOU, and often in addition the borrowers are required to pay additional “mortgage guarantee” insurance policies, to cover the lender against repayment default. Talk about a win, win situation, a scam more like. One that needs addressing and sorting out!
Your signature creates the money for the bank to then loan back to you with interest, they retain legal ownership of the property until all repayments are made, and they also add additional charges, such as the mortgage guarantee payment, set up fee’s and other administration costs.
Mortgage is a French word meaning Death Grip – how appropriate!