The following agents may take part in a securitization:
• Asset Originator or Settlor.- Who will be responsible for originating and grouping the assets to be conveyed to the trust.
• Structuring and Placement Agent.- Will handle the structuring and placement of the issue, and help register it and handle the necessary official paperwork with the securities authorities (CNBV; RNV, etc.).
• Law Firm.- Two law firms must be retained, one which will prepare the contracts for the issue and help register it and handle the necessary official paperwork with the securities authorities (CNBV; RNV, etc.), and another that will issue a legal opinion on the issue.
• Trustee.- Will be responsible for the management of the Trust.
• Joint Representative.- Will be responsible for protecting the interests of the investors.
• Portfolio Manager: Handles periodic collection of the mortgages backing the debt instruments and prepares collections reports.
• Master Portfolio Manager: Reconciles the information produced based on collection and distribution of funds and ratifies its veracity.
• Guarantee Providers.- Depending on the type of structure and loans to be securitized, an issue may be backed by:
o Timely Payment Guarantees (TPG) or Mortgage Insurance.- A financial product that guarantees losses for up to a given percentage of the unpaid balance of the mortgage in case of nonpayment by the end borrower.
o Financial Guarantees or Credit Lines (GPO, PCG).- Where a financial broker undertakes to deliver to the trust (on a percentage of the unpaid balance of the bonds in circulation), the sums of money necessary for the trust to opportunely pay the holders, both principal and interest on the securities.
o Total Hedges (Full Wrap).- Covers the totality of the unpaid balance of the mortgage in case of default by the end borrowers.
o Cash Flow Hedges (MW - UDI Swap).- Covers possible extraordinary or permanent reductions in the minimum wage in real terms to allow obligors to pay a mortgage denominated in UDIS in terms of Minimum Wages in exchange for payment of a fixed premium in UDIS over the life of the mortgage.
• Rating Agencies.- Which assess the structure’s capacity for payment of both monthly interest and the principal on maturity.
To consult the directory of contacts in participants in Mortgage Backed Bond issues, click here.
After defining all participants in the placement, the structure of any asset securitization must be supported by contracts and documentation presented to the CNBV for review and future approval:
• Trust Agreement.- Which will regulate the trust’s operations and provide for the efficient management of the funds obtained.
• Management Contract.- Which will regulate the actions of the manager of the assets backing the issue.
• Assignment Agreement.- Which will formalize the assignment of assets and the characteristics they must possess to be considered in the securitization.
• Contract(s) or Policy/(ies) for guarantors associated with the mortgages and the structure.
• Prospectus and Supplement.- Which will explain, in broad terms, the principal characteristics of the securitization and the mortgages backing it.
• Legal Opinion on the Issue.- Issued by a law firm that validates the legality of the documentation and the securitization operation.