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Commitment Holder

Truth:

 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.  

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 commitment from the financial institution, preferably a well-known European bank, is to make blocks of securities or single large-denomination 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 the target is not told about the loans that back the securities issued by financial institutions. 

He is told that the securities are issued based on large funds deposits held by the banks for extremely wealthy people. 

He is told that these very wealthy people make huge profits on the trades, and that through special, secret dispensation the target can deposit money in the bank and participate in the huge profits.

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