participation certificate

Definition

Financing in which an individual buys a share of the lease revenues of an agreement made by a municipal or governmental entity, rather than the bond being secured by those revenues. This form of financing can be used by the municipal or government entity to circumvent restrictions that might exist on the amount of debt they might be able to take on. As of now, the only agencies to issue or guarantee such certificates are Freddie Mac, Fannie Mae, Ginnie Mae and Sallie Mae.

Use this term in a sentence

You should try to make sure that you keep your participation certificate in a safe place that you can quickly get to.

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He got a participation certificate and we were all very happy with it and we all knew that we would be doing alright in the future.

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The participation certificate was a unique way for the municipality to generate funds, this was effective as the project was completed.

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