Collateral Basics, Valuation, and Management

These pages explain what collateral is, how lenders value it, and how pledged assets are monitored over a loan’s life.

In this section

• Collateral Creation and Assignment
  Focused credit and lending reference entries about collateral creation and assignment.
  • Collateral Assignment: Designation of a Policy's Death Benefit or Cash Surrender Value to a Creditor
    A detailed explanation of Collateral Assignment, its purpose, mechanisms, and its role in securing loans using life insurance policies.
  • Collateral: Security in Finance and Banking
    Collateral: A form of security used to secure a bank loan, including impersonal forms such as life-assurance policies or shares. Learn about its historical context, types, importance, and key considerations.
  • Collateralize: Pledging Assets to Secure a Debt
    An in-depth look at the process of pledging assets to secure a debt, its historical context, types, importance, examples, and much more.
  • Pledge: Deposit of Personal Property as Security for a Debt
    A comprehensive explanation of the concept of Pledge, including its definition, types, historical context, applicability, and related terms.
• Collateral Valuation and Control
  Focused credit and lending reference entries about collateral valuation and control.
  • Collateral Management: The Practice of Monitoring and Valuing Collateral to Mitigate Risk
    The practice of overseeing and ensuring the safety and valuation of collateral to mitigate financial and operational risks in various industries, including finance and banking.
  • Haircut: Risk Mitigation in Collateral Valuation
    Understanding the reduction applied to the value of collateral to account for risk in financial transactions.
  • Hypothecation: Secure Loans Through Pledged Goods
    A comprehensive look at hypothecation, a financial mechanism where goods are pledged as collateral for loans, including its types, applications, historical context, and significance in modern finance.
  • Negative Equity
    Condition in which debt secured by an asset exceeds the asset's market value, commonly seen in underwater mortgages and upside-down auto loans.