News & Market Reports

Morgan Stanley Smith Barney

Pledged Assett Feature on First Mortgage Loans

April 18, 2011
I thought you should see this as it may be helpful..

Morgan Stanley Home Loans is excited to announce the Pledged Asset Feature - now available! The Pledged Asset Feature is a great tool to recommend to clients for a variety of scenarios. Please see attached to view the Pledged Asset Client Brochure.

A Possible Solution for Low AppraisalsIn today's mortgage marketplace, many individuals looking to purchase or refinance a home encounter obstacles due to a lower than expected appraisal, a high loan-to-value or a desire not to tie up liquidity with a large down-payment. The Pledged Asset Feature may be a welcomed solution for high net worth clients formerly unable to take advantage of today's lower interest rates or who prefer a less traditional approach. Using the Pledged-Asset Feature allows clients to maintain a separate investment account which may be used to pledge eligible securities as collateral in addition to the traditional real estate collateral. A pledge account may also allow certain clients to meet underwriting guidelines to qualify for a more favorable mortgage loan.

Use as a Down PaymentHome purchases typically require a cash down payment, often requiring home buyers to liquidate a portion of their securities portfolio, potentially incurring adverse tax consequences and disrupting their long-term portfolio strategy.* The Pledged Asset Feature allows clients to finance up to 100% of their home's value using eligible securities in their investment portfolio and home as collateral in lieu of the normal down payment. That means your clients can enjoy home ownership while continuing to hold or trade securities – so their assets keep working for them.**

Sponsor a Family MemberThe Pledged Asset Feature allows your clients to assist a family member to purchase or refinance a home. In a sponsorship, the sponsor pledges his/her securities as additional collateral for an eligible relative's mortgage loan. Eligible relatives include parents, grandparents, siblings, aunts, uncles, nieces or nephews. Under the Sponsorship Program, the eligible securities remain in the sponsor's name. In other words, there is no need to co-mingle assets or debts.
The Pledged Asset Feature can help resolve one of the single biggest obstacles to home ownership, the requirement for a cash down payment. The Sponsorship feature may be ideal for a young person whose earnings are sufficient to meet a monthly mortgage payment but who may not have accumulated enough money for the down payment. A client's family member can enjoy home ownership while the client maintains their current investments.

If you'd like to discuss our programs more fully please let me know.

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