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Commitment Holder:
In finance a commitment is an agreement issued by a lender, sometimes
in the form of a letter (commitment letter) agreeing to make a loan at a certain rate during a certain specified period. Commitment fee is the amount the lender charges for holding up his end of the bargain. The purpose of such agreements is so that a corporation or homebuyer can make plans for the future, but rescind if there are changes to those plans, and the commitment usually carries an escape clause just for that eventuality. The term "commitment holder" could
be applied to the potential borrower who holds a loan commitment
from a lender.
Another type of commitment has to do with the sale of loans in the
SECONDARY MARKET. In this instance, a bank or mortgage company makes a commitment to secondary market buyers to provide x number of mortgages for pooled portfolio investments. This is done by issuing securities backed by the mortgages and other types of loans held by the issuing institution.
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The Scam: Swindlers have a field day with this last type of commitment. In ScamSpeak, a Commitment Holder is one who holds commitments from both a financial institution and
Secondary Market
purchasers.
The so-called commitment from the financial
institution, preferably a well-known European bank, is to make
blocks of securities or single large-value securities available to
the commitment holder to sell to his secondary market contracts.
The commitment from the secondary market
purchasers is to buy the securities provided by the financial
institution. In effect, the Commitment Holder is a securities
broker. Is this a bad thing? No, not really, and that's
not where the problem exists.
The scam is that you are not told about the loans that back the securities issued by financial institutions. You are not told that those loans must be repaid, with interest.
You are told that the securities are issued based on large funds deposits held by the banks for extremely wealthy people. You are told that these very wealthy people make huge profits on the trades, and that through special, secret dispensation you can deposit your money in the bank and participate in the huge profits.
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