Finance
In Hawaii, what is the purpose of a 'hypothecation' in real estate financing?
AA. Converting a mortgage to a different interest rate
BB. Pledging property as collateral for a loan without giving up possession✓ Correct
CC. Estimating a property's hypothetical value
DD. Combining multiple loans into a single mortgage
Explanation
Hypothecation is the pledging of property as collateral for a loan while retaining possession. When you take out a mortgage, you hypothecate (pledge) the real estate without giving it up.
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