hard · Asset-Backed Securities
Under ASC 860, a sponsor seeks 'sale' treatment for a transfer of receivables to an SPE.
Which of the following conditions, if present, would most likely cause the transfer to be recharacterized as a 'secured financing' rather than a sale?
- The sponsor maintains an obligation to repurchase specific loans at a fixed price.
- The sponsor retains the most subordinate 5% horizontal interest.
- The SPE is not consolidated on the sponsor's balance sheet under ASC 810.
- The sponsor continues to act as the servicer for a market-rate fee.
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