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Asset Securitization: Theory and Practice by JOSEPH C. HU

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Chapter 3

Intermediary Participants of the Asset Securitization Market

In the asset securitization market, many intermediary participants are working either upfront or behind the scenes with originators and investors to ensure the to-be-issued transactions are appropriately structured with respect to the tightness of legal documents, the rigor of accounting, the integrity of the cash flow, and the evaluation of the credit risk. (Note that throughout the balance of this book, the terms of transaction and securities are used in such a way that a transaction refers to the issuance of asset-backed securities that are backed by a specific pool of assets. In a transaction, several securities are often issued. These securities have different maturities and different credit ratings. Each security, which is supported by a specific portion of the total cash flow of the underlying assets, has a specific expected maturity and a specific credit rating.)

The purpose of the many different parties participating in a transaction is to clearly identify and protect the interests of the originator/seller, the issuer, the servicer, and the many investors in the transaction. Further, after the securities of a transaction are issued, the participants will continue to monitor all the factors that affect the market value and credit performance of the securities for the benefit of the issuer and the investors.

This chapter discusses the functions of attorneys, accountants, guarantors and credit enhancers, ...

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