Agency Agreement Securitisation

As a general rule, issued securities are evaluated by a rating agency to give them a rating. A wide range of investors requires a minimum investment level rating or higher. The rating process is currently dominated by the rating agencies Standard and Poor`s, Moody`s, Fitch or Dominion Bond Rating Service. They use their accumulated know-how, data and modeling capabilities to assess anticipated bond losses issued by the securitization vehicle. In general, rating agencies examine the following: in Luxembourg, the financial statements of securitisation instruments must be audited by one or more independent auditors („Accredited company reviewers“). As a result of the credit crunch caused by the subprime crisis, the U.S. market for securitized loan-backed bonds was very weak in 2008, with the exception of bonds guaranteed by a government-backed agency. As a result, interest rates on previously securitized loans have increased, such as home loans, student loans, auto loans and commercial mortgages. [21] The initiator is the entity that assigns assets or risks in a securitization transaction. As a general rule, it was the party (lender) that initially signed and securitized the receivables (loans). The commitments arising from these loans are therefore initially due to this unit prior to the transfer to the SPV.

The author may sometimes be a third party who buys the pool with the intention of securitizing it afterwards; in this case, the author is also designated as a sponsor. Initiators include captive financial firms owned by major automakers, other financial companies, commercial banks, real estate credit companies, manufacturers, insurance companies and investment firms. The service provider is the company that collects the payment of the principal and interest of the debtors and manages the portfolio after the transaction closes. The author regularly acts as a service provider, although this is not always the case. Specialized service providers play this role in most non-performing transactions (NPLs). Maintenance includes after-sales service and payment processing of debtors in the securitized pool and collection operations in accordance with the pool and service agreement. Maintenance can include managing failures, winding up security and reporting monthly. The service is generally compensated with a fixed service fee.