Cross-collateralization
Cross-collateralization is when you use something you own as a way to help pay for something else you own. Let's say you have a toy car and a toy truck. If you wanted to borrow some stickers to put on your toy truck, your mommy or daddy might say that you have to use your toy car as a way to make sure you give back the stickers. This means that if you don't give back the stickers, your mommy or daddy gets to keep your toy car until you do.
Grown-ups do the same thing when they borrow money from a bank. If they want to borrow money to buy a house, the bank might ask them to use something else they own, like a car or some other property, as a way to make sure they pay back the money they borrowed. This means that if the grown-up doesn't pay back the money, the bank gets to take their other property instead.
So, cross-collateralization helps banks make sure they get their money back when they lend it out to grown-ups, just like it helps your mommy or daddy make sure they get their stickers back when they lend them to you.
Grown-ups do the same thing when they borrow money from a bank. If they want to borrow money to buy a house, the bank might ask them to use something else they own, like a car or some other property, as a way to make sure they pay back the money they borrowed. This means that if the grown-up doesn't pay back the money, the bank gets to take their other property instead.
So, cross-collateralization helps banks make sure they get their money back when they lend it out to grown-ups, just like it helps your mommy or daddy make sure they get their stickers back when they lend them to you.