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Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.

Abhandlungen über Johann Heinrich Jung-Stilling

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Collateral value; hypothecary value; loan value

In general, the professionally determined (market) price of an asset as the basis for a loan to be granted. – Valuation prescribed by supervisory law, in particular in connection with cover in the case of mortgage lending by Pfandbrief banks. Accordingly, the mortgage lending value is the price of a property “which, based on experience, can be expected to be realized upon its sale, irrespective of temporary fluctuations in value on the relevant property market, for example due to economic factors, and excluding speculative elements, during the entire term of the loan” (wording of § 3 of the Regulation on the Determination of the Mortgage Lending Values of Real Estate pursuant to § 16 paras. The limit, expressed in monetary units, up to which an institution is prepared to grant a loan (the maximum amount of credit that a lender may lend against collateral) for an asset presented as collateral (material security for a loan). – In the insurance industry, the amount at which an insurance company will lend, at interest, to the insured, after the policy has been in force for a certain length of time. – See Actuary, LTV cap, LTV ratio, LTV Regulation, coverage test, mobile loan, mortgage equity withdrawal, pawnbroker, real loan, interest deferral. – Cf. annual report
2005 of BaFin, p. 112 (Pfandbrief banks may only use sixty percent of the mortgage lending value as cover; p. 113: Regulation on the determination of the mortgage lending value is in progress and entered into force on August 1, 2006).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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