collateralize

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Collateralize

To offer an asset as a surety that a debt will be repaid. The asset may be kept by the lender until the debt is repaid, or the borrower may maintain possession with the proviso that the lender may take possession of the borrower defaults. For example, one collateralizes a mortgage loan with the real estate one purchases with the loan. If the loan is not repaid, the lender has the right to seize the real estate in question. See also: Lien.

collateralize

To pledge an asset as security for a loan. A loan to a broker is collateralized by pledging securities.
References in periodicals archive ?
It's that collateralized reinsurance has found itself a niche at the bottom of the reinsurance program.
While the money market savings account is well-suited for organizations that want the security of a bank deposit with FDIC insurance, those organizations whose bylaws stipulate that investments must be collateralized can take advantage of the benefits of the automated repurchase investment sweep.
2) Is collateralized by debt or equity securities that are liquid and readily marketable;
The end result is that in the aggregate, Holding is deemed to have been relieved of $200 of liabilities when the total amount owed to the bank is only $100 and the collateralized assets have a mere $120 fair market value (FMV).
The resulting positive differential between the cash flow from the assets collateralizing the CMO bonds (the GNMA, FNMA, or FHLMC mortgage certificates) and the principal and interest payments on the collateralized bonds became known as a CMO residual or CMO excess cash flow.
Collateralized with securities held by the pledging financial institution's trust department or agent in the entity's name.

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