CA Final · Advanced Financial Management · Securitization
In a securitization transaction, Sunrise Finance Ltd (a non-banking lender) sells a pool of its auto loans to a trust that issues pass-through certificates to investors. Which party is the originator in this transaction?
Sunrise Finance Ltd is the originator because it granted the auto loans and transfers that pool for securitization. The trust acts as the special purpose vehicle issuing certificates, investors fund the purchase, and the borrowers are obligors who repay the underlying loans.
- ASunrise Finance Ltd, which sold the loan poolCorrect
- BThe trust that issues the certificates
- CThe investors who buy the certificates
- DThe obligors who repay the auto loans
Explanation
The originator is the entity that originally lent the money and owns the receivables being securitized. Sunrise Finance created the loans and sold the pool. The trust is the special purpose vehicle (SPV), investors are buyers of securities, and obligors are the borrowers.
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