hypothecate (redirected from hypothecations)
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To pledge an asset
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
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
To pledge securities as collateral for a loan without giving up ownership of the securities. See also rehypothecate
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.