Main operation steps:
1. Identify securitized assets and establish asset pools. On the one hand, sponsors should analyze their financing needs, on the other hand, they should choose assets for securitization according to the requirements of securitization. Generally choose assets with stable future cash flow.
2. Set up a special purpose vehicle (SPV). The purpose is to minimize the impact of bankruptcy risk of commercial banks on securitization.
3. Real sale of "assets". Only by "real sale" can we achieve "bankruptcy isolation" between securitized assets and commercial banks, thus effectively protecting the interests of investors.
4. Credit enhancement. Improve the credit rating of issued securities, so that securities can better meet the needs of investors in terms of credit quality, timeliness and certainty of repayment.
5. Credit rating. Credit rating agencies give rating results by examining the legality and effectiveness of various contracts and documents. The higher the credit rating, the lower the risk of securities, so the lower the cost of raising funds through issuing securities.
6. sell securities.
7. Pay the purchase price of assets to the sponsors. When the securities are sold, the underwriter distributes the issuance funds to the issuer SPV, and the issuer pays the issuance fee to the underwriter according to the agreement, which is helpful to the long-term stability of the housing mortgage securitization market and the rationalization of the term structure of the securitization products.
8. Manage asset pools and realize economies of scale in securitization transactions. SPV employs professional service providers to manage asset pools. Service providers are generally provided by commercial banks because commercial banks are already familiar with the basic assets.
9. Pay off the securities. According to the agreement in the prospectus when the securities are issued, SPV will entrust the trustee to repay the principal and interest to the investors in full and on time on the securities repayment date.