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 Says:
You are said to "hypothecate" the mortgage when you pledge it as collateral for a loan.

Related Terms:
Collateral
Loan
Mortgage
Pledged Asset
Rehypothecation

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