Pledged Asset
An asset that is transferred to a lender for the purpose of securing debt. The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs. Investopedia Says:
A pledged asset is returned to the borrower when all conditions of the debt have be satisfied.
Home buyers can sometimes pledge assets, such as securities, to lending institutions in order to reduce the necessary down payment. Thus, these securities would not have to be sold in order to meet the down-payment requirements, allowing for any capital appreciation while maintaining the associate mortgage benefits. Related Terms:
Capital appreciation
Collateral
Default
Hypothecation
Loan
Mortgage
Rehypothecation |