Financing in California>Question Details

Tarerea Kimi…, Other/Just Looking in California

What is the advantage and disadvantage of Debenture to Lender and to Borrower?

Asked by Tarerea Kimitaunga, California Mon Oct 25, 2010

Seeking Finance in Fundamental financial administration the question relate to the first question I asked.....

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The debenture is basically the note in which the buyer signs saying that he owes the lender "x" amount of dollars and will pay it back with the agreed terms. Then the lender uses this in a couple of ways. If you default in the loan they can sell it to a third party and the third party will foreclose on your home or it is used when the lender is bought by another entity.

There is no advantage to the borrower except that it is the promissory note and that they can't be removed from the home if they are paying the lender back according to the terms. The disadvantage of this for the lender is that they can't kick you out if your mortgage is getting upside down (home is worth less than what is owed) even though you are still paying within the agreed terms.
0 votes Thank Flag Link Tue Oct 26, 2010
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