File:Borrowing Under a Securitization Structure.png

The securitization structure diagram shows the components of a typical securitization. It is important to note that not all securitizations are identical. Nevertheless, the diagram generally illustrates the roles of the various participants in a securitization structure.

the key elements to a typical securitization include the following:

Issuer - A bankruptcy-remote special purpose entity (SPE) formed to facilitate a securitization and to issue securities to investors.

Lender - An entity that underwrites and funds loans that are eventually sold to the SPE for inclusion in the securitization. Lenders are compensated by cash for the purchase of the loan and by fees. In some cases, the lender might contract with mortgage brokers. Lenders can be banks or non-banks.

Mortgage Broker - Acts as a facilitator between a borrower and the lender. The mortgage broker receives fee income upon the loan's closing.

Servicer- The entity responsible for collecting loan payments from borrowers and for remitting these payments to the issuer for distribution to the investors. The servicer is typically compensated with fees based on the volume of loans serviced. The servicer is generally obligated to maximize the payments from the borrowers to the issuer, and is responsible for handling delinquent loans and foreclosures.

Investors - The purchasers of the various securities issued by a securitization. Investors provide funding for the loans and assume varying degrees of credit risk, based on the terms of the securities they purchase.

Rating Agency - Assigns initial ratings to the various securities issued by the issuer and updates these ratings based on subsequent performance and perceived risk. Rating agency criteria influence the initial structure of the securities.

Trustee - A third party appointed to represent the investors' interests in a securitization. The trustee ensures that the securitization operates as set forth in the securitization documents, which may include determinations about the servicer's compliance with established servicing criteria.

Underwriter - Administers the issuance of the securities to investors.

Credit Enhancement Provider - Securitization transactions may include credit enhancement (designed to decrease the credit risk of the structure) provided by an independent third party in the form of letters of credit or guarantees.

	This work is in the public domain in the United States because it is a work prepared by an officer or employee of the United States Government as part of that person’s official duties under the terms of Title 17, Chapter 1, Section 105 of the US Code. Note: This only applies to original works of the Federal Government and not to the work of any individual U.S. state, territory, commonwealth, county, municipality, or any other subdivision. This template also does not apply to postage stamp designs published by the United States Postal Service since 1978. (See § 313.6(C)(1) of Compendium of U.S. Copyright Office Practices). It also does not apply to certain US coins; see The US Mint Terms of Use.
This file has been identified as being free of known restrictions under copyright law, including all related and neighboring rights.

https://creativecommons.org/publicdomain/mark/1.0/PDMCreative Commons Public Domain Mark 1.0falsefalse