By Joseph C. Hu
Asset Securitization is meant for rookies and industry pros alike who're drawn to studying approximately asset securitization—its thoughts and practices. it really is designed in order that the readers will come away with a basic yet entire figuring out of the asset securitization industry. As such, the booklet goals to supply a evaluate of the market's improvement, invaluable framework, strength merits, and particular descriptions of significant asset securitization items.
half I of the publication, which is composed of 4 chapters, will talk about the basic options, the investment potency, the marketplace contributors, and the capability advantages of asset securitization. An research of loan finance should be supplied partially II, which is composed of six chapters that hide numerous issues from the outline of many differing kinds of residential mortgages to the securitization of alternative forms of residential mortgages, together with the now notorious sub-prime mortgages. additionally integrated are very important themes, equivalent to prepayments, funds movement constitution, adulthood and credits tranching, and the buying and selling and relative price of many of the mortgage-backed securities. the 3 chapters partly III will clarify the opposite significant asset securitization items, resembling advertisement mortgage-backed securities, bank card receivable-backed securities, vehicle loan-backed securities, and collateralized bond responsibilities. half IV has chapters: one stories the cave in and the capability restoration of the asset securitization industry, and the opposite describes the asset securitization efforts in Japan, Australia, Taiwan, and China.
vast tables and charts are offered to assist illustrate an idea or describe a product. Neither analytical discussions nor funding ideas of a few of the asset-backed securities are integrated as they aren't the point of interest of this book.Content:
Chapter 1 Asset Securitization: inspiration and marketplace improvement (pages 1–18):
Chapter 2 Originators and traders of the Asset Securitization marketplace (pages 19–28):
Chapter three middleman contributors of the Asset Securitization marketplace (pages 29–37):
Chapter four beneficial components and merits of Asset Securitization (pages 39–47):
Chapter five Residential Mortgages (pages 49–65):
Chapter 6 The Residential personal loan industry (pages 67–78):
Chapter 7 Residential personal loan Pass?Through Securities (pages 79–97):
Chapter eight Multiclass loan Pass?Throughs (pages 99–114):
Chapter nine Private?Label personal loan Pass?Throughs (pages 115–130):
Chapter 10 Subprime Mortgage?Backed Securities (pages 131–154):
Chapter eleven advertisement Mortgage?Backed Securities (pages 155–174):
Chapter 12 Asset?Backed Securities (pages 175–191):
Chapter thirteen Collateralized Debt responsibilities (pages 193–207):
Chapter 14 The cave in and restoration customers of the Asset Securitization marketplace (pages 209–220):
Chapter 15 Asset Securitization in Asia?Pacific (pages 221–232):
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Additional info for Asset Securitization: Theory and Practice
In addition to the assumed discount rate for the present value calculation, the analysis requires realistic and reasonable assumptions on the behavior of the cash ﬂow, such as economic and interest rate scenarios during the life of the underlying assets, borrowers’ propensity to prepay the loans, and incidence of default. (Actually, the discount rate may not be randomly assumed. ) These assumptions are based on in-depth and truthful analysis of the historical cash-ﬂow patterns of a vast amount of similar assets.
This chapter will elaborate on these nine elements. It will also discuss in more detail the triple beneﬁts of asset securitization to the originator, the investor, and the borrower. S. asset securitization market, it can be concluded that the success of the market is dependent on the presence of nine ingredients. They are:1 1. 2. 3. 4. 5. 6. 7. 8. 9. a sound loan origination process; a complementary legal framework; high integrity of cash-ﬂow analysis; clearly deﬁned accounting rules; prudent credit risk evaluation; full-ﬂedged investment banking services; a mature government debt market; an active secondary market; a broad investor base.
To ﬁnance the purchase of the loans from the originator, the SPE issues in the capital market a security that is backed by the very loans it purchases from the originator. Because the originator sells the loans it originates, the originator is also called the seller. Therefore, in asset securitization, the originator, the lender, and the seller are the same entity and the three terms are used interchangeably. 19 ASSET SECURITIZATION 20 The remainder of this section uses simple numerical examples to describe how an originator ﬁnances its loan originations through securitization.
Asset Securitization: Theory and Practice by Joseph C. Hu