medium · Asset-Backed Securities asset-nuances

In a 'Grantor Trust' auto ABS structure, what is the key limitation regarding the capital stack?

1. It generally cannot feature multiple classes with different principal payment priorities (no sequential tranching).
2. It must always be fully consolidated onto the originator's balance sheet under every circumstance involved.
3. It is completely prohibited from using any form of external credit enhancement, such as a surety bond wrap from a monoline.
4. It is not permitted to hold any auto loans with original contractual terms longer than thirty-six calendar months in length.

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