easy · Asset-Backed Securities abs-core
What is the primary objective of legal isolation in an Asset-Backed Securities (ABS) transaction?
- To maximize the amount of federal income tax paid by the issuing vehicle.
- To ensure that the loan pool's cash flows are separated from the insolvency risk of the originator.
- To prevent the rating agencies from performing a detailed analysis of the underlying loans.
- To allow the originator to keep all credit risk on their own balance sheet while receiving cash.
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