medium · Asset-Backed Securities

Under ASC 860, which condition must be met for a transfer of receivables from an originator to an ABS trust to qualify for 'Sale' treatment (derecognition)?

1. The transaction must utilize a Master Trust architecture rather than a standalone trust
2. The trust must be classified as a REMIC for federal income tax purposes
3. The originator must retain a vertical risk retention interest of at least 5% under Dodd-Frank
4. The assets must be legally isolated from the reach of the transferor and its creditors

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