hypothecation

hy·poth·e·cate   (hī-pŏth'ĭ-kāt')    tr.v.   hy·poth·e·cat·ed, hy·poth·e·cat·ing, hy·poth·e·cates To pledge (property) as security or collateral for a debt without transfer of title or possession. [Medieval Latin hypothēcāre, hypothēcāt-, from Latin hypothēca, pledge, deposit, from Greek hupothēkē, from hupotithenai, to give as a pledge, suppose; see hypothesis.] hy·poth'e·ca'tion n., hy·poth'e·ca'tor n.

Hypothecation

When a person pledges a mortgage as collateral for a loan, it refers to the right that a banker has to liquidate goods if you fail to service a loan. The term also applies to securities in a margin account used as collateral for money loaned from a brokerage

Investopedia Commentary

You are said to "hypothecate" the mortgage.

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See also: Collateral, Loan, Mortgage, Pledged Asset, Rehypothecation

hypothecate

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

Main Entry: hy·poth·e·cate
Pronunciation: hi-'pä-th&-"kAt, hI-
Function: transitive verb
Inflected Forms: -cat·ed; -cat·ing
Etymology: Medieval Latin hypothecare to pledge, from Late Latin hypotheca pledge, from Greek hypothEkE, from hypotithenai to put under, deposit as pledge
: to pledge as security without delivery of title or possession —compare PAWN —hy·poth·e·ca·tion /-"pä-th&-'kA-sh&n/ noun