A Stock loan quasi-mortgage
is a form of securities lending that uses stocks, bonds, mutual funds, or other eligible securities
as the effective guarantee
for a personal credit
line used for the purchase of a home, investment in real estate, or for some portion of either of these (e.g., short-term finance, downpayments). Stock loan quasi-mortgages are typically in the form of a simple credit line, with interest-only repayment terms.
financing is the most well-known form of individual finance in the field of securities lending, the stock loan quasi-mortgage is substantially different. These loans are crafted as non-purpose credit in compliance with FRB Banking regulations, as opposed to margin loans which are "purpose credit". The key difference is that margin loan financing is intended for the purchase of stock, allowing the client to leverage
the value of their holdings
, while "non-purpose credit" is for any application other than the repurchase of marginable securities. Interest, however, may be deductible
The stock loan quasi-mortgage is not a mortgage in the purest sense, but rather an asset-based formed of financing that allows borrowers to tap their portfolios without having to liquidate
them. Unlike "non-recourse
stock loans" which have been dismantled and regulated out of existence by lawmakers in the post-financial crisis era, the stock loan quasi-mortgage programs of today are handled entirely by and through fully licensed and regulated brokerages that are members of the Financial Industry Regulatory Authority (FINRA) and banks with transparent
and audited financials.