Thursday, May 7, 2009

Rating Securitizations (2)

* reviewing the originator of the assets (ie the bank) from both a financial and operational point of view. The latter is important because usually the originator will continue to collect payments due on the underlying assets on behalf of the SPV, although sometimes there is a third-party 'servicer' to carry out this role.
* that even if the originator of the assets becomes insolvent, the investors will still be paid in a timely manner. This means have planned arrangements in place to collect the payments due on the assets even if the administration provided by the originator no longer exists.
for regular issuers, the ratings agencies will carry out audits to ensure standards are being maintained

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