AdministratorWhat are securitization exposures?
securitization exposure means an exposure to a special purpose vehicle that is unable to vary its capital structure on a voluntary basis and is secured primarily by financial assets on a non-recourse basis to the originator or seller of such assets.
Who are the participants in the securitization process?
Typically, financial institutions, insurance companies, pension funds, hedge funds, companies, high net worth individuals. Investors purchase the securities issued by the SPV according to their risk/return preferences.
Who is servicer in securitization?
The servicer is the entity that collects principal and interest payments from obligors and administers the portfolio after transaction closing. Regularly the originator acts as servicer, although this is not always the case.
Which parties are involves in assets securitizations?
A securitisation transaction generally involves some or all of the following parties: (i) the initial owner of the asset (the originator or sponsor) who has a loan agreement with the borrowers (obligors); (ii) the issuer of debt instruments who also is the SPV.
What is the exposure amount of a securitization transaction?
The exposure amount of a securitization exposure that is a repo-style transaction, eligible margin loan, or derivative contract (other than a credit derivative) is the exposure amount of the transaction as calculated under § 3.34 or § 3.37, as applicable. (d) Overlapping exposures.
What is securitization and how does it benefit institutional investors?
Securitization helps institutional investors to access assets that would otherwise not be open to them, e.g., credit card receivables. They are able to gain exposure to real consumer and corporate assets without having to develop in-house origination and servicing capabilities.
What is sub-participation and participation?
The terms sub-participation and participation have no strict legal meaning. In the context of finance transactions, it refers to when a lender under a loan agreement sub-contracts all or part of its risk to another financial institution.
Who is involved in the securitization process?
A number of participants are involved in the securitization process. In most cases, the process begins with the originator. This is the institution that owns the pool of assets such as mortgages, auto-loans, or receivables which it wishes to repackage and sell.