Bank Offers Pledged-Asset Mortgage

Charles Schwab Bank, Reno, has introduced a pledged-asset mortgage that allows well-heeled borrowers in certain states to use their stock portfolio as collateral for buying a home.Rather than selling stock to get cash for a downpayment and closing costs, the loan leverages eligible securities in a client's investment portfolio as a guarantee for a mortgage loan. Applicants must have at least $250,000 in assets and meet other requirements to qualify. "Our clients told us they want to be able to buy a home without having to liquidate assets and alter their investment strategy," Richard Musci, the bank's chief lending products officer, said at the Mortgage Bankers Association convention in San Francisco. The Schwab Pledged Asset Mortgage provides up to 100% financing, and borrowers have access to their accounts and execute trades during the loan's term. There are no interest rate premiums or private mortgage insurance requirements. However, clients cannot pledge more than 60% of their liquid assets and cannot pledge retirement assets or volatile securities such as options and low-value stocks.