patrick.net

Frankly, I don’t expect many readers to be familiar with the term above, let alone to know what it means. So let’s begin by turning to the fount of all knowledge in our age – Wikipedia.

Here we learn that “hypothecation is the practice where [usually through a letter of hypothecation] a borrower pledges collateral to secure a debt or a borrower, as a condition precedent to a loan, or has a third party [usually an affiliate] pledge collateral for the borrower. The borrower retains ownership of the collateral, but the creditor has the right to seize possession if the borrower defaults. A common example occurs when a consumer enters into a mortgage agreement, in which the consumer’s house becomes collateral until the mortgage loan is paid off.”

http://www.jpost.com/Business/Business-Features/Global-agenda-Rehypothecation-360757

#housing