Debenture: A type of long-term bond or note given as evidence of debt. Unlike a mortgage note, a debenture is not secured by a specific property. Fannie Mae issues debentures to finance the acquisition of mortgages in the secondary mortgage market. If a borrower defaults on an FHA loan, the government gives interest-bearing debentures to the mortgagee after the title is transferred to FHA.

 

Related Words

Debenture: A debenture is an unsecured bond. Most bonds issued by corporations are debentures, which are backed by its reputation rather than by any collateral, such as the company's buildings or its i . . . View Full Definition

Debenture Stock: An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond and collater . . . View Full Definition

Debenture Bond: Any debt obligation backed strictly by the borrower's integrity, e.g. an unsecured bond. A debenture is documented in an indenture.

Subordinated Debenture Bond: Probabilities that are determined subjectively (for example, on the basis of judgment rather than statistical sampling).