All-purpose argument when negotiating traditional loan documents: "Our opinion committee will never go for this."
All-purpose argument when negotiating loan documents in the brave new world of securitized loans: "The rating agency will never go for this."
A. What’s Different About Securitization?
If you really understand securitization, you can skip this section. But who really does? Most of the mistakes we’ve seen in loan origination come from not paying enough attention to the fundamental differences between securitized pooling and traditional lending practices.
Securitization is a method of obtaining investment capital by packaging a group of similar financial assets, such as mortgage loans, and then selling interests in the entire pool to investors in the capital markets. This approach gives borrowers access to a wider range of funding sources with different economic goals and, usually, lower overhead costs than traditional lending institutions such as banks and insurance
