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Credit Securitization: how exactly does it work?

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Question by Dang: Credit Securitization: how exactly does it work?
Say I have a portfolio of 100 credit card customers, what are the technical steps to securitize it? E.g. how do I do the following:

1) Data Mining
I assume the first step is some sort of database/spreadsheet (MS Excel?) with the debtors info, how does one quickly sort what slots in each tranche? Some sort of macro/algorithm?

2) Credit Rating
How does one benchmark what the risk of the tranches are? Do I simply go to Moodys and ask them to look at them and that’s it??

3) Issuance
Once we have a plan of which receivables we want in each tranche, what then? Do we go to a legal firm to issue the bonds?

Team Size Required:
How many people would I need in a small securitization team? What sort of experience would they require if we were just doing basic credit card pfolio?

Basically I am looking to set up my own niche securitization venture…I have no background in securitization though!

Thanks!

Best answer:

Answer by ADAM S
Read This : – ” Credit Card Securitization – An Overview ”

Here : – http://www.flixya.com/post/GOLDCash360/767657/

.+.

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How do mortgage backed securities work?

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Question by mercymercy: How do mortgage backed securities work?

Best answer:

Answer by Net Advisor
“Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property.”

They are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity. A company sells securities (bonds) that are backed by principal and interest payments made by people who make payments on home loans. This process is called, “securitization.”

In the event of default, the bond holders lose money. Too many people assumed factors that would never happen.

1. Real estate prices could never fall.
2. Interest rates won’t go up.

Result (in short). During 2004-2006, The FED raised the Fed Funds Rate 425%. The result caused a massive credit squeeze where people with adjustable and higher risk mortgages began defaulting. The result created foreclosures, and this began to feed on itself.

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