securitisation
Pooling loans together
Securitisation is the financial practice of pooling various types of debt—mortgages, car loans, credit card balances—and selling them as bonds to investors.
The process converts illiquid assets into tradable securities: The bank used securitisation to move risky loans off its balance sheet.
Widespread securitisation of subprime mortgages contributed to the 2008 financial crisis.
Also spelled securitization.
Secured by underlying property
- mortgage-backedBacked by home loans
- tranchesPortions of a whole
- bondsTies that unite
- collateralSecurity for debt
pooling · originator · credit enhancement · receivables · cash flow · issuance · underwriting · CDO
Under top credit tier
- defaultPreset standard option
- contagionDisease spread by contact
- credit crunchSevere reduction in lending
- housing bubbleUnsustainable property price surge
systemic risk · collapse · bailout · write-downs · rating agencies · opacity · leverage · foreclosure
Act of bringing forth
- poolingMerging shared contributions
- credit enhancementMethod to reduce investment risk
- servicingPerforming routine maintenance
- waterfallDescending river over precipice
subordination · assignment · transfer · structuring · documentation · pricing · distribution · warehousing
Swiss Rhine city
- capital requirementsMinimum funds banks must hold
- complianceAdhering to requirements
- disclosureAct of revealing information
- Dodd-FrankFinancial regulation legislation
transparency · due diligence · reporting · oversight · prudential · supervision · credit risk · framework
asset-backed
Secured by underlying property
- mortgage-backedBacked by home loans
- tranchesPortions of a whole
- bondsTies that unite
collateral · pooling · originator · credit enhancement · receivables · cash flow · issuance · underwriting · CDO · ABS
subprime
Under top credit tier
- defaultPreset standard option
- contagionDisease spread by contact
- credit crunchSevere reduction in lending
housing bubble · systemic risk · collapse · bailout · write-downs · rating agencies · opacity · leverage · foreclosure · Lehman
origination
Act of bringing forth
- poolingMerging shared contributions
- credit enhancementMethod to reduce investment risk
- servicingPerforming routine maintenance
waterfall · subordination · assignment · transfer · structuring · documentation · pricing · distribution · warehousing · replenishment
Basel
Swiss Rhine city
- capital requirementsMinimum funds banks must hold
- complianceAdhering to requirements
- disclosureAct of revealing information
Dodd-Frank · transparency · due diligence · reporting · oversight · prudential · supervision · credit risk · framework · standards
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