Securitization of assets

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For full text article go to : http://www.educorporatebridge.com/securitization/securitization-of-assets This Article explain concepts like securitization of asset, meaning of securitization in layman language, ABS,MBS,CDO,CMO etc.

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Securitization of assets

  1. 1. What is Securitization?
  2. 2. Securitization is the process conversion of receivables and cash flow generated from a collection or pool of financial assets like mortgage loans, auto loans, credit card receivables etc into the marketable securities. ” “
  3. 3. Asset securitization is the process whereby interests in loans and receivables are packaged and sold in the form of ABS asset backed securities. Asset Securitization “ ”
  4. 4. Parties involved in securitization
  5. 5. Typical Securitization Structure
  6. 6. Must Know Concepts in securitization
  7. 7. Asset back securities (ABS) Collateralized debt obligation Mortgage-backed securities (MBS) Collateralized Mortgage Obligations
  8. 8. Asset back securities (ABS) Asset-backed securities are the bonds or notes backed by some financial assets. These assets consist of receivables such as mortgage loans, credit card receivables, auto loans, manufactured-housing contracts and home- equity loans.
  9. 9. Collateralized debt obligation It is an investment grade security backed by a pool of various other securities. Mortgage-backed securities (MBS) Mortgage-backed securities are bonds that are backed by pools of mortgage loans. Examples Mortgage papers, house papers, land and Property papers.
  10. 10. Collateralized Mortgage Obligations (CMO) The CMO is a multiclass bond backed by a pool of mortgage pass- through or mortgage loans.
  11. 11. Difference between MBS and ABS No. MBS ABS 1 The Duration for trading is more than 15 years. The Duration for trading is up to 5 years. 2 Securities: Mortgage papers, house papers, land and Property papers. Securities: Credit card papers, Share certificates, Auto or vehicle papers.
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