Securitisation Contents n n Securitisation Process Parties to

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Securitisation

Securitisation

Contents n n Securitisation Process Parties to a securitisation Transaction Reverse Mortgage Loan (RML)

Contents n n Securitisation Process Parties to a securitisation Transaction Reverse Mortgage Loan (RML) Nshant Dhruv, Atmiya College

Meaning n Securitisation is the process of pooling the homogenous illiquid financial assets (debt)

Meaning n Securitisation is the process of pooling the homogenous illiquid financial assets (debt) into marketable securities that can be sold to investors. . Nishant Dhruv, Atmiya College

Securitisation Process 1. The company is giving finance for lease, housing loans or any

Securitisation Process 1. The company is giving finance for lease, housing loans or any other form of debt know as receivable. And the company is known as “originator” 2. Once large portfolio of assets is being there, this portfolio will be sold to third party (normally SPV) for funding the assets. Nishant Dhruv, Atmiya College

3. The administration of the asset is then sub -contracted back to originator by

3. The administration of the asset is then sub -contracted back to originator by SPV. Originator is responsible for collecting interest and principal payment on the loan and transfer to SPV. 4. The SPV issues TRADABLE SECURITIES to fund the purchase of assets. Nishant Dhruv, Atmiya College

5. The investors purchase the securities because they are satisfied that the securities would

5. The investors purchase the securities because they are satisfied that the securities would be paid in full and on time. The proceeds from the sale will be used to pay originator 6. As cash flow arises on the assets, these are used by SPV to repay funds to the investors in the securities. Nishant Dhruv, Atmiya College

Reverse Mortgage Loan n Senior Citizens are an increasing component of Indian Society. On

Reverse Mortgage Loan n Senior Citizens are an increasing component of Indian Society. On one hand, there is significant increase in longevity and low mortality, on the other hand cost of good health care facilities is being increasing. So, RML seeks to monetise the house as an asset Nishant Dhruv, Atmiya College

n Determination of eligible amount of loan: 60 -71 45 % 71 -75 50

n Determination of eligible amount of loan: 60 -71 45 % 71 -75 50 % 76 -80 55 % Above 80 60 % Nishant Dhruv, Atmiya College

Types of Securities 1. 2. Asset Backed Securities (ABS) Mortgage Based Securities (MBS) Nishant

Types of Securities 1. 2. Asset Backed Securities (ABS) Mortgage Based Securities (MBS) Nishant Dhruv, Atmiya College

ABS : 1. n n ABS are securities in which investors rely on the

ABS : 1. n n ABS are securities in which investors rely on the performance of the assets that collateralize the securities. They don’t rely or take an exposure either on the basis of “originator” or on “SPV”. MBS : 2. n n The loan is secured by specified real estate property MBS are securities backed by the mortgage loans. Nishant Dhruv, Atmiya College

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