Collateral Valuation and Control

Collateral valuation and control determine how much protection a pledged asset provides after closing. Collateral Management covers the full lifecycle: eligibility, legal control, valuation, custody, reconciliation, calls, substitutions, enforcement, and release.

A Haircut converts a reference value into a more conservative recognized value. Hypothecation explains how an owner can retain use or economic exposure while property supports financing, including the separate risk created by rehypothecation. Negative Equity describes the opposite coverage problem: debt exceeds current asset value.

Questions to Answer

• What valuation basis, source, timestamp, currency, and reviewer apply?
• Which assets remain eligible after delinquency, rating, concentration, and document tests?
• What haircut, advance rate, reserve, or cap converts value into credit support?
• Where is the collateral held, and who can release, substitute, or reuse it?
• How quickly can exposure and collateral value change?
• What triggers a call, dispute, revaluation, inspection, or enforcement review?
• What would net recovery be after senior claims, delay, and disposition costs?

Reported collateral value is not guaranteed recovery. Contract terms, market conditions, custody, priority, and applicable law control real outcomes.

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