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Real Estate Research starts here! | International Commercial Property | Commercial Law Firms | International Real Estate |      Jun 29, 2017

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Pfandbrief (pl. Pfandbriefe)

A bond issued by a German bank or licensed credit institution and backed by long-term assets (such as mortgage loans ‘Hypothekenpfandbrief’ and ship loans ‘Schiffspfandbrief’) or public sector debts. When backed by a number of property mortgages a Pfandbrief is similar to a mortgage-backed obligation. Such forms of security have been in existence for over 200 years. When backed by mortgage loans they are generally rated triple-A as the loan-to-value ratio cannot be greater than 60 percent and generally the borrowers have a good credit rating. Pfandbriefe have an average maturity of five to seven years, may not be prepaid and are retained on the balance sheet of the lending bank. However, they may be pledged a collateral. Such securities are regulated by the Pfandbrief Act (Pfandbriefgesetz), which covers such matters as supervision by a German supervisory authority (BaFin or Bundesbank), transparency, appraisal standards, disclosure and monitoring and stress testing standards. Also, in the event of insolvency (which is virtually unheard of), there is special priority granted to creditors.
See also www.pfandbrief.org




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