hypothecate


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Related to hypothecate: Alienation Clause

Hypothecate

To pledge an asset as collateral on a loan without the lender taking possession of the collateral. It especially applies to mortgages: the borrower hypothecates when he/she pledges the house as collateral for payment of the mortgage, or he/she may hypothecate the mortgage in order to borrow against the value of the house. In both situations the borrower retains the house, but the lender has the right to take possession if the borrower does not service the debt. Hypothecation also occurs in trading: a broker will allow an investor to borrow money to purchase securities with those securities as collateral. The investor owns the securities but the broker may take them if the debt is not serviced, or if the value of the securities falls below a certain level. See also: Foreclosure, Margin account.

hypothecate

To pledge securities as collateral for a loan without giving up ownership of the securities. See also rehypothecate.

hypothecate

To give a security interest in specific real or personal property while retaining possession of the property. Contrast with a pawnshop, in which one surrenders possession of the security,or a loan against negotiable securities such as stocks and bonds,which could be sold by the borrower if the lender did not require possession in itself.

References in periodicals archive ?
This periodic call by the likes of the AA and RAC for more of the licence fee and other duties to be spent on road maintenance is laughable given that they know that no UK government of whatever political persuasion will hypothecate its tax take.
The General Directorate of Passport here, called on citizens wishing to travel abroad to comply with regulations and instructions, maintain and validate their travel documents and don"t neglect or hypothecate.
Even where such rights to take possession or hypothecate are conferred, care must be taken to ensure that legal norms are observed in the process.