The National Association of Securities Dealers has issued a warning to investors about the risks associated with mortgages having a 100% loan-to-value ratio, also known as pledged-asset mortgages.In an Investor Alert, the NASD noted that customers of brokerage firms offering 100% mortgages can pledge their stocks, bonds, mutual funds, and other securities in lieu of a downpayment for a mortgage. The firms often tout the fact that such mortgages allow investors to avoid private mortgage insurance or liquidating their securities to come up with a downpayment, but they may "overlook, or consign to the fine print," the associated risks, the trade group said. "There 100% mortgages are not suitable for everyone, and investors should approach them with extreme caution," said Mary L. Schapiro, NASD vice chairman and president of regulatory policy and oversight. "Many investors aren't aware of the considerable risks involved. We're especially concerned that they don't understand that the securities they pledge in lieu of a downpayment may be liquidated if the value of those securities drops below a certain level, or if they default on their mortgage." The association can be found online at http://www.nasd.com.

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