Describe Mortgage, Pledge And Lien?
Mortgage is a legal assurance given to the creditor. The interest of the property gives to the creditor for meeting an condition. After the repayment of the debt the property will return to his borrower.
If the debtor fails to repay the debt, the creditor can sell the property. The possession of the property remains with the borrowers. It is simply the transfer of an interest in a specific mortgage property. The securities which are generally mortgaged as a cover for an finance are title deeds, life policies, stock and shares.
A pledge is an actual delivery of the movable property to the lender as a security for a loan. The ownership, however, remains next to the borrowers. The difference is that in case of mortgage, the possession of property remains in the paw of borrower. In case of pledge the lender is entitled to the exclusive possession of the property till the debit is repaid.
A lien is a right to retain property till the debt is repaid. It is a legal claim on the securities which come in to the banker's hand in the ordinary course of business.The lien arises by implication of tenet from certain situations. While the mortgage and pledge arises from a special agreement between a borrower and lender.
Well all three are forms of securities which banks clutch against loan which they provide to customers or simply when banks finance people.There are necessarily two types of loans funded facility and non funded facility.
The three securities are forms of collateral.Now mortgage is when a customer hands over the original documents of his property which he hands over to the ridge as security to repay against the loan he has taken.
Mortgage is a conditional transfer of ownership where on earth is the borrower is unable or does not repay the loan amount then the bank have right to sell the property.Bank also gets the mortgage marked by registering the mortgage at registrar.
Now pledge is another form of wellbeing where the security is the stock which bank take ownership from the customer and then again sells it to the same customer at a stipulated price beside some interest.
Pledge is basically done when the borrower is short of running capital (daily use capital for business).Now the third type which is most soft form of security and most wanted by banks motivation its easy to convert into cash if borrower is unable to repay or does not repay.
In lien mound takes securities of banks bought by borrower as security and if customer does not income back bank simply write a letter to the securities issuer and verbs there ownership through the lien documents.
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