Substitution of Collateral and Why It Matters

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Today, I want to talk about something that confuses a lot of people, substitution of collateral. It did me for many years. Collateral is the asset you pledge when you get a loan that if you don’t pay as agreed, they can take it away from you. Substitution of collateral is when a lender allows the borrower to transfer the mortgage that the borrow signed to another property that the borrower has that is of equal or greater value.