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This is sort of a niche financial product but I’ll explain mechanics since plausible a few readers will eventually be able to use it: Banks want you to have ~20% equity in your house to protect them against default risk. (Lower down-payments are subsidized by USFG through GSEs.) https://t.co/iinLuFJoQL
That equity will almost always be in the house but for wealth management customers it could be in many other things. You could pledge a CD (hah) or basically anything you keep in your brokerage account. (Some restrictions apply.)
The pledge immobilizes your stocks for a few years, generally at the wealth management division that is making this transaction happen. (But options exist for other arrangements.) In event value of stock declines below level bank is comfortable with, you get a low-urgency call.
“This sounds like a whole lot of work.” The classic transaction people do post-liquidity is “sell stock buy house.” ~40% of 20% means that that cost 8% of the house price in taxes. Note that no sale happens here by default.
This is a risky transaction for well-off financially sophisticated people, but it is a very useful transaction for well-off financially sophisticated people, and you can easily end up being eligible for it without knowing it exists in the world And now you do.