Sub-mortgage Part 1
June 27, 2008 4:05 am More Information
A sub-mortgage is the agreement wherein a mortgage lender uses a mortgage held by him as collateral for his loan. The mortgagee is pledged as a security for a loan to the mortgagee. The original lender uses a borrower’s property instead of his own property for getting a loan.
There are 3 kinds of sub-mortgage: Pledge or Pawn, Charge, Lien and Hypothecation.
Pledge or pawn – This is a contract where an item is given to the lender to stand as security against the loan. This may be valuable things such as jewelry, gold, documents and share certificates. The pledge will be effected when the items are given to the lender.