I think the mortgage is a security for investing and trading
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Source: Debenture - Wikipedia, the free encyclopedia
In law, a debenture is a document that either creates a debt or acknowledges it. The term is used in corporate finance for a medium to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note.
Debentures are generally freely transferable by the debenture holder. Debenture holders have no voting rights and the interest paid to them is a charge against profit in the company's financial statements.
In the United States, debenture refers specifically to an unsecured corporate bond;[1] i.e., a bond that does not have a certain line of income or piece of property or equipment to guarantee repayment of principal upon the bond's maturity. Where security is provided for loan stocks or bonds in the US, they are termed 'mortgage bonds'.
However, in the United Kingdom a debenture is usually secured.[2] In Asia, if repayment is secured by a charge over land, the loan document is called a mortgage; where repayment is secured by a charge against other assets of the company, the document is called a debenture; and where no security is involved, the document is called a note or 'unsecured deposit note'.[3]
A US corporation receives an advantage when it issues debentures (as opposed to issuing secured corporate bonds) because it means that the company does not have to set aside certain assets or income to guarantee against its default in paying back the principal at maturity. Therefore, a corporation that issues debentures may use for other financing activities those assets or funds that would otherwise be held in a separate account.
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Home = hypothecation, pledge, pignus, surety to guarantee performance on (promissory) note.
Mortgage = contract establishing debt
Lien = security interest of the creditor on the asset (charge on land)
Note = (promissory) note, debt instrument, debt security
Loan = credit, deferred payment
Registration = register of the security in commerce, for creditors' benefit
Tax = service charge for usage of benefits, payment to King for profits, uses, and tenuring an estate
Insurance = limited liability, protection of the asset for the creditor, debtor agrees by contract to pay this expense
Usury = interest, creditors return of investment along with principal
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Source: Mortgage-backed security - Wikipedia, the free encyclopedia
A mortgage-backed security (MBS) is an asset-backed security or debt obligation that represents a claim on the cash flows from mortgage loans, most commonly on residential property.
First, mortgage loans are purchased from banks, mortgage companies, and other originators. Then, these loans are assembled into pools. This is done by government agencies, government-sponsored enterprises, and private entities, which may offer features to mitigate the risk of default associated with these mortgages. Mortgage-backed securities represent claims on the principal and payments on the loans in the pool, through a process known as Securitization. These securities are usually sold as bonds, but financial innovation has created a variety of securities that derive their ultimate value from mortgage pools.
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Source: Asset-backed security - Wikipedia, the free encyclopedia
An asset-backed security is a security whose value and income payments are derived from and collateralized (or "backed") by a specified pool of underlying assets. The pool of assets is typically a group of small and illiquid assets that are unable to be sold individually. Pooling the assets into financial instruments allows them to be sold to general investors, a process called securitization, and allows the risk of investing in the underlying assets to be diversified because each security will represent a fraction of the total value of the diverse pool of underlying assets. The pools of underlying assets can include common payments from credit cards, auto loans, and mortgage loans, to esoteric cash flows from aircraft leases, royalty payments and movie revenues.
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Source: Securitization - Wikipedia, the free encyclopedia
Securitization is a structured finance process that distributes risk by aggregating debt instruments in a pool, then issues new securities backed by the pool. The term "Securitisation" is derived from the fact that the form of financial instruments used to obtain funds from the investors are securities. As a portfolio risk backed by amortizing cash flows - and unlike general corporate debt - the credit quality of securitized debt is non-stationary due to changes in volatility that are time- and structure-dependent. If the transaction is properly structured and the pool performs as expected, the credit risk of all tranches of structured debt improves; if improperly structured, the affected tranches will experience dramatic credit deterioration and loss.[1] All assets can be securitized so long as they are associated with cash flow. Hence, the securities which are the outcome of Securitisation processes are termed asset-backed securities (ABS). From this perspective, Securitisation could also be defined as a financial process leading to an issue of an ABS.
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Source: http://en.wikipedia.org/wiki/Security_(finance)
A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities (such as banknotes, bonds and debentures) and equity securities, e.g., common stocks; and derivative contracts, such as forwards, futures, options and swaps. The company or other entity issuing the security is called the issuer. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions.
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Two primary forms of negotiable instruments: promissory notes and bills of exchange
02-07-2010, 10:38 AM
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