Brokers/traders regularly use mortgage contracts when creating marginal accounts. For real estate, a lessor uses a mortgage agreement to avoid subletting. In addition, lenders use the assumption in real estate when another property insures a mortgage or construction credit. If you are interested, you can read this real example of hypothesis agreement. As a general rule, the former and the second holders of pledges draw up an agreement on how to handle this unfortunate event. There are many aspects of the hypothesis that we will be looking at now. When an investor asks a broker to buy securities on the margin, an assumption can occur in two directions. First, the acquired assets may be hypothetical, so that the broker can sell some of the securities if the investor does not maintain the credit repayments;  The broker may also sell the securities if they lose value and the investor does not respond to a margin call. The second sense is that the initial contribution that the investor makes to the margin account may be itself in the form of securities and not a cash deposit, and again, the securities belong to the investor, but can be sold by the creditor in the event of default. In both cases, unlike consumer or business financing, the borrower generally does not own the securities because they are in the broker`s accounts, but the borrower retains legal ownership. The assumption is a common feature of consumer contracts with mortgages – the debtor legally owns the house, but until the mortgage is repaid, the creditor has the right to take possession (and perhaps even possession) – but only if the debtor does not follow the repayments.  If a consumer takes an additional loan against the value of his mortgage (commonly called ”second mortgage”), up to the current value of the home minus unpaid repayments), the consumer takes the mortgage himself – the creditor can still confiscate the house, but in this case, the creditor will be responsible for the unpaid mortgage debt.
Sometimes consumer goods and business equipment can be purchased on credit contracts with assumption – the goods are legally held by the borrower, but again, the creditor can seize them if necessary. A hypothesis agreement form can be accessed here in the SEC archives. As far as vehicle loans are concerned, the vehicle is kept by the borrower, but the same is under the authority of the bank/financier. When the borrower becomes insolvent, the bank takes possession of the vehicle after notification and then sells it. The loan account is credited with the proceeds from the sale of the asset in order to recover the interest due on the principal and the amount of the interest. The remaining balance will be returned to the borrower. Apart from vehicles, the assumption of shares and receivables can be made. It is interesting to note that the creditor does not count in its balance sheet the non-financial assets available from the re-library. A merchant may indicate that he does not want the comic to remedeoskeleton the distributor`s security. The comic must then decide whether a margin account is granted to the merchant. The hypothesis is an agreement containing standard characteristics and rules; which generally cover each party`s definitions, insurance, inspection rules, rights and remedies, safety details for the hypothesis, sales of achievements, insurance revenues, liability of each party, jurisdiction, asset marking, etc. This act protects the rights of both contracting parties.
Because the assumption provides a guarantee to the lender based on the borrower`s mortgaged collateral, it is easier to secure a loan and the lender may offer a lower interest rate than an unsecured loan. As a general rule, the hypothesis agreement indicates important points: this activity usually requires agreement and is called an over-assumption.