Pledged asset obligations are basically installment loans, and mortgage loans are the most common. There are, however, other types of pledged asset obligations. Often called secured credit, pledged asset debts are any credit accounts that require the borrower to pledge some asset as security for the credit or loan. The mortgage lender will not consider the pledged assets against the applicant. Also, because these credit accounts are secured by other assets, most creditors do not analyze these accounts as stringently as consumer debts. However, mortgage lenders do place much weight on the applicant’s history with pledged asset loans because of their similarity with mortgage loans.
Single-payment loans are often interest-only programs, in which the total principal balance is due at the end of the term but interest payments are normally due each month. It is sometimes referred to as interest-only balloon loan programs.
Monthly interest payments on single-payment notes are treated as long-term liabilities, depending upon the loan amount and remaining term. In addition, mortgage lenders will analyze the borrower’s assets to confirm his or her ability to pay the note at its scheduled maturity.
If the note will be coming due within two years and the applicant has no clear ability to repay the obligation, mortgage lenders may decline financing.
A line of credit extended in connection with a checking account is normally considered a longterm liability if a balance is owed. It is essentially classified as a revolving account. If the monthly payment amount is not indicated by the lending institution, five percent of the remaining balance is normally calculated and used as the monthly payment.
Liabilities | admin | 
March 7, 2009 11:46 am | 
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