The general rule is to discount
the current value of the collateral.
Not exact matches
When considering loan approval, North Coast Financial is most concerned with the
current value of the property used as
collateral as well as the amount
of equity the borrower has in the property.
To the extent a Fund sells securities short, it will provide
collateral to the broker - dealer and (except in the case
of short sales «against the box») will maintain additional asset coverage in the form
of cash, U.S. government securities or other liquid securities with its custodian in a segregated account in an amount at least equal to the difference between the
current market
value of the securities sold short and any amounts required to be deposited as
collateral with the selling broker.
Loan approval is primary based on the
current value of the real estate being used as
collateral and the borrower's equity in the real estate.
The fund may loan portfolio securities to qualified broker - dealers or other institutional investors provided: (1) the loan is secured continuously by
collateral consisting
of U.S. government securities, letters
of credit, cash or cash equivalents or other appropriate instruments maintained on a daily marked - to - market basis in an amount at least equal to the
current market
value of the securities loaned; (2) the fund may at any time call the loan and obtain the return
of the securities loaned; (3) the fund will receive any interest or dividends paid on the loaned securities; and (4) the aggregate market
value of securities loaned will not at any time exceed one - third
of the total assets
of the fund, including
collateral received from the loan (at market
value computed at the time
of the loan).
This is why a life insurance policy with a loan lapses if the outstanding balance
of the loan gets too close to the
current cash
value — in essence, it's just the insurance company foreclosing on the insurance policy
collateral to pay off the loan before there's any possibility that the loan could go underwater.