medium · Asset-Backed Securities regulatory
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 subordinate 5% loss interest in the collateral pool.
- The SPE is not consolidated on the sponsor's balance sheet under VIE rules.
- The sponsor continues to service the transferred receivables for a market-rate servicing fee.
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