Mortgage Minute – Cross Securitisation

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Mortgage Cross Securitisation

If you heard the term cross-security, or cross-collateral, or cross-securitization, what it generally implies is that you’ve got multiple access to three, or four, or five, six properties. And what the bank has done is combine them into a package and they’re treating your loan as one loan against a group of houses. So, let’s say you got four properties.

You’ve got one mil of debt, and each of these properties is worth $1 million on its own. And what you might actually be able to do is separate the securities, split banks. And potentially, what you can do to desecuritise these properties. And what it means is you might actually require to have those properties secured at the bank to have the deposition that you do.

You can actually use those properties as security to go out and buy more property. So, cross-security is great for the bank, sometimes required for the lending, but not always what you need.