When an investor takes out a loan and gives three different parcels of land as collateral, what is this known as?

When an investor provides three different parcels of land as collateral for a loan, this practice is referred to as a blanket mortgage. A blanket mortgage is specifically designed to cover multiple properties under a single mortgage agreement. This type of financing is commonly used by developers or investors who wish to finance several pieces of real estate in one transaction, as it simplifies the process and reduces closing costs compared to obtaining separate mortgages for each individual property.

By using a blanket mortgage, the borrower can leverage the combined value of all the properties, making it easier to secure larger amounts of financing. Additionally, these loans often come with a release clause, allowing the borrower to pay off a portion of the loan and remove a specific property from the blanket mortgage, which can be beneficial for managing real estate investments effectively.

In contrast, the other types of loans listed do not share the same characteristics. A conventional mortgage typically involves a single property as collateral, a construction loan is specifically for funding the building of a structure, and a hard money loan focuses on quick, short-term financing based on the property’s value rather than the borrower’s creditworthiness. Thus, recognizing the unique attributes of a blanket mortgage is essential to understanding how it operates in real estate financing.