Mortgage is the practice where a debtor mortgages collateral to secure a debt, or as a condition of the debt, or a third party guarantee of security for the debtor. A hypothesis letter is the usual instrument of pawning. The potential role of remhypotheque in the 2007-08 financial crisis and in the shadow banking system was largely overlooked by the mainstream financial press, until Dr. Gillian Tett of the Financial Times in August 2010[6] drew attention to a paper by Manmohan Singh and James Aitken of the International Monetary Fund, which examined the subject. [5] When banks and brokers use hypothetical bonds as collateral to support their own transactions and negotiate with their client`s agreement to ensure lower borrowing costs or a discount on fees. This is called a rehypotheque. Mortgages are the most common in mortgages. The borrower technically owns the house, but since the home is mortgaged as collateral, the mortgage lender has the right to seize the home if the borrower cannot meet the terms of repayment of the loan agreement – which happened during the enforcement crisis. Auto loans are similarly secured by the underlying vehicle. On the other hand, unsecured loans do not work with the assumption, as there is no guarantee to claim in the event of default. The main objective of the hypothesis is to reduce the creditor`s credit risk. If the debtor cannot pay, the creditor holds the security and can therefore resell his assets, sell them and thus compensate for the missing inflows of funds.

In the event of default by the debtor without prior assumption, the creditor cannot be assured that he can seize the debtor`s sufficient assets. Because the assumption makes it easier to get the debt and potentially reduces its price; The debtor wants to deduct as much debt as possible – but the isolation of “good assets” for collateral reduces the quality of the remainder of the debtor`s balance sheet and thus its solvency. Rem-hepthisk occurs mainly in financial markets, where financial companies reuse collateral to insure their own borrowing. For the creditor, the guarantee not only reduces credit risk, but also allows for lighter or lower refinancing; However, in the case of an initial mortgage agreement, the debtor may limit the reuse of the security.