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CMA Final · Strategic Financial Management · Securitization

A bank pools 2,000 housing loans with a total outstanding principal of Rs 400 crore and sells them to a special purpose vehicle (SPV), which issues pass-through certificates to investors. In this structure, the entity that originally lent the money and sold the receivables to the SPV is called the:

The entity that originally lent the money and sold the loan receivables to the SPV is the originator. Borrowers are obligors, the arranger structures the deal, and the trustee protects investors, so only the originator describes the seller of the pooled receivables.

  1. AOriginatorCorrect
  2. BObligor
  3. CServicer-trustee
  4. DArranger

Explanation

In securitization the originator is the lender that creates the loans and transfers the receivables to the SPV. Obligors are the borrowers who owe the money, and the arranger structures the deal. The trustee protects investor interests and is not the lender.

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