easy · Asset-Backed Securities
In a revolving master trust, what happens during the 'Controlled Accumulation Period'?
- The trust is required to sell its remaining receivables to a third party to generate cash for bondholders.
- All interest collections are diverted to the residual holder to maximize the originator's return.
- The servicer is allowed to stop collecting payments from cardholders as the deal winds down.
- Principal collections are set aside in a trust account for several months to pay off the bonds in a single bullet payment at maturity.
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