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Securitization

Asset securitization is the structured process whereby interests in loans and other receivables are packaged, underwritten, and sold in the form of "asset-backed" securities. This process enables credit originators to

  • Transfer some of the risks of ownership to parties more willing or able to manage them,
  • Access broader funding sources at more favorable rates,
  • Save some of the costs of on-balance-sheet financing, and
  • Manage potential asset-liability mismatches and credit concentrations.

See also Accounting

Learn More

Asset Securitization (Comptroller's Handbook, November 1977)
Covers a bank's use of asset securitization as a way to generate funds, manage the balance sheet, and generate income

References
OCC=Bulletin

Accounting and Reporting for Mortgage Loan Commitments (OCC 2005-18, May 2005); Interagency Advisory
Covers accounting and reporting for mortgage loans held for resale or sold under mandatory delivery and best efforts contracts

Asset Securitization Activities (OCC 1999-46, March 2010); Interagency Statement
Addresses weaknesses in the asset securitization practices of some insured depository institutions including inadequate controls and liquidity risk

Capital Treatment for FAS 166 and FAS 167 (ASC 860 & 810) (OCC 2010-5, February 2010); Final Rule
Covers modification of the treatment of certain structured finance transactions involving a variable interest entity

Capital Treatment of Recourse, Direct Credit Substitutes, and Residual Interests in Asset Securitization (OCC 2002-22, May 2002); Interagency Questions and Answers
Addresses questions regarding capital treatment of recourse, direct credit substitutes, and residual interests in asset securitizations

Complex Structured Finance Transactions (OCC 2007-1, January 2007); Interagency Statement
Covers examples of complex structured financial transactions that often pose elevated risks to financial institutions

Covenants Tied to Supervisory Actions in Securitization Documents (OCC 2002-21, May 2002); Interagency Advisory
Addresses the safety and soundness implications of certain covenants included in securitization documents

Implicit Recourse in Asset Securitization: Policy Implementation (OCC 2002-20, March 2010); Interagency Guidance
Highlights several examples of post sale actions taken by institutions with respect to securitized assets

Mortgage Banking: Interagency Advisory on Mortgage Banking (OCC 2003-9, February 2003); Interagency Advisory
Provides guidance regarding mortgage-banking activities, primarily in the valuation and hedging of mortgage-servicing assets

Risk-Based Capital Interpretations Credit Derivatives (OCC 1999-43, November 1999); Interagency Statement
Addresses the risk-based capital treatment of certain synthetic securitization transactions involving credit derivatives

Risk Modeling, Model Validation (OCC 2000-16, May 2000)
Provides guidance for mitigating risks arising from reliance on improperly validated or tested computer-based financial models


Related News and Issuances
Publish DateIdentifierTitle
01/24/2012  NR 2012-11, Acting Comptroller Talks About Securitization and Derivatives at the American Securitization Forum