A portfolio or pool contains securities to which third parties have rights (the risk that clear titles become comingled [= mixed] with assets owned legally by a third party). – This became apparent in many cases in the course of the financial crisis that followed the subprime crisis. When special-purpose entities and funds in financial distress wanted to sell securities from their portfolios, preferential claimants emerged who first had to be satisfied. For example, real estate financiers had sold their claims on owners to a special purpose vehicle by way of securitization. Some of these homeowners, however, again offered their residential property as an underlying to a bank for a loan for the purpose of a trip around the world. However, the underlying (the real estate; residential real estate) had been transferred in the meantime by the real estate financier to the special purpose entity, which did not know the legal title of the lending bank. It is true that there is a registry of deeds everywhere in the USA. But the federal regulations are not uniform, so that in many cases it is time-consuming to find out the encumbrances on a particular property. – The risk that assets owned legally by a third party become mixed with the insolvency estate in case of bankruptcy and are difficult to segregate. – See Property, unencumbered.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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