medium · Asset-Backed Securities
A series is in its 'Controlled Accumulation Period'. An early amortization trigger is breached on day 15 of the month.
What happens to the principal collections already sitting in the Principal Funding Account (PFA) for that month?
- They remain in the PFA until the scheduled bullet maturity date
- They are returned to the seller to purchase new receivables to 'cure' the trigger
- They are used to fund a reserve account to support the subordinate tranches
- They are immediately distributed to pay down the Class A bonds
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