medium · Asset-Backed Securities abs-core
In a two-step auto-loan securitization, the originator first sells receivables to a bankruptcy-remote depositor in a transaction intended as a true sale. The depositor then transfers the receivables to the issuing trust.
What is the principal legal purpose of this arrangement?
- To prevent financial reporting consolidation through the use of two separate transferees
- To permit fixed- and floating-rate notes through the use of separate issuing entities
- To convert auto receivables into qualified mortgages through a REMIC tax election
- To isolate assets through the originator-to-depositor true sale before issuer transfer
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