Query by Tomxi: Could you please clarify the notion of Securitisation and SPV(Specific-goal car)?
thank you!
Greatest answer:
Answer by northfulton39
Securitization is the approach of packaging equivalent financial instruments (like mortgages to men and women) into a new safety (like a mortgage-backed safety). For a bank to securitize an asset (like a mortgage loan to a customer) the bank demands to acquire the asset (make the loan), classify the asset (by danger score), collateralize (make confident it’s secured), pool (combine it with other mortgages) and distribute (sell the mortgage-backed security to investors).
A Particular Objective Vehicle is the conduit or legal vehicle formed to hold receivables transferred by the originator on behalf of the investors. The SPV represents the collective home and cashflows of the investors.
Securitization is a difficult subject but if you are into finance it is one particular of the most crucial subjects to understand.
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