Introduction to the Fourth Edition
Publisher’s Note
Frequently Used Terms
Chapter 1 The Structure of Asset-Backed Securities and the Federal Regulatory Scheme
- Introduction: Why Securitize?
- Structuring a Securitization
- A Short History of the Federal Regulatory Scheme for Securitizations
Chapter 2 The Key to Securitization: Isolating the Assets to Be Securitized from the Risk of an Insolvency Proceeding
- Introduction
- The Effect of the Bankruptcy Code on Creditors
- “True Sale”: Exclusion of Securitized Assets from the Bankruptcy Estate
- The Special Purpose Bankruptcy Remote Entity
- Other Bankruptcy Concerns
- Other Insolvency Regimes: Banks, Insurance Companies, and Covered Financial Companies
- Security of Securitizations
Chapter 3 Registered Offerings of Asset-Backed Securities
- Decoding Section 5
- Registration Under Regulation AB
- What Qualifies as an “Asset-BackedSecurity”Under Regulation AB?
- The Depositor and the Issuer (and the Issuing Entity)
- Eligibility for Registration of ABS
- The Registration Process
- Registering “Underlying Securities”
- Issuer’s Review of the Pool Assets
Chapter 4 Investor Communications in a Public Offering
- The Tension Between Full Disclosure and Limiting Investor Communications
- Classification of Issuers Under the Federal Securities Laws
- Communications with Investors During the Offering Process
- Prospectus Delivery
- Coping with the Internet
Chapter 5 Complying with the Disclosure Requirements for Asset-Backed Securities
- The Disclosure Framework of Regulation AB
- Responsibility for Third-PartyDisclosure
- What Must Be Disclosed?
- The FDIC Safe Harbor Rule—Substantive Conditions and Disclosure Requirements
- Item 1105 of Regulation AB—Static Pool Data
- More Detail on the Cover and in the Summary
- Emphasis on Specifics in Risk Factors
- “Plain English” and “Clear and Concise” Disclosure
- Tips for Drafting Clear Disclosure
Chapter 6 Periodic Reporting Under the Securities Exchange Act
- The Periodic Reporting Scheme for Asset-Backed Securities
- Certain Issues for ABS Issuers Under the Exchange Act
- Distribution Reports on Form 10-D
- Current Reports on Form 8-K
- Annual Reports on Form 10-K
- Demands for Repurchase or Replacement of Defective Pool Assets
- Third-Party Due Diligence Reports
- Resecuritizations and Repackagings
- Rule 12b-25
- Selective Disclosure: Regulation FD
- EDGAR
- Preparing to Comply with the Reporting Requirements
- Liability for Exchange Act Reports: Consequences of Failure to File
- Suspension of Reporting Obligations by ABS Issuers
Chapter 7 Exempt Transactions and Exempt Securities
- Why Choose a Private Placement of ABS Rather Than a Registered Public Offering?
- Private Placements and Resales
- Regulation S Safe Harbor for Unregistered Offerings and Sales Outside the United States
- Exempt Securities
- SEC Filing Requirements Applicable to Exempt Offerings and Securities
Chapter 8 Liabilities and Defenses Under the Federal Securities Laws
- Keeping Your Eye on the Ball
- Sources of Civil Liability Under Federal Law
- Controlling Persons
- Materiality: Safe Harbors
- Availability of Defenses: Interpreting the Cases
- Diligence in Offerings of Asset-Backed Securities
- Disclaimers of Reliance and “Big Boy” Letters
Chapter 9 Credit Risk Retention
- The Need for “Skin in the Game”
- U.S. Credit Risk Retention
- EU Risk Retention
- The Challenges of Complying with Both U.S. and EU Risk Retention
Chapter 10 The Investment Company Act and the Volcker Rule
- Why Are the Investment Company Act and the Volcker Rule Relevant to Securitizations?
- The Investment Company Act
- The Volcker Rule
Chapter 11 Federal Income Tax Considerations in Securitization Transactions
- Three Basic Tax Issues
- Grantor Trusts
- Trusts That Issue Debt
- REMICs
- Taxable Mortgage Pools
- FASITs
- Offshore Issuers
- Distressed Mortgage Loan Funds
Chapter 12 ERISA Considerations in Securitization Transactions
- The Importance of ERISA Regulation to Issuers of Asset-Backed Securities
- Performing an ERISA Analysis of ABS Debt Offerings
- Plan Asset Regulations or Statutory Exceptions
- Administrative Exemptions for ABS Equity Securities
- Performing an ERISA Analysis of ABS Certificate Offerings
Chapter 13 Accounting Considerations
- Introduction
- ASC 860 and ASC 810
- Who Has to Consolidate the Special-Purpose Entity?
- Determining Whether a Securitization Meets Sale Criteria
- Opinion Letters
- Consolidation Principles Illustrated
Chapter 14 Attachment, Perfection and Priority of Security Interests in Financial Assets
- Application of the UCC to Securitizations
- Attachment of Security Interests
- Perfection and Priority
- Mechanics of Perfection
Chapter 15 Special Issues for Banks and Thrifts
- Introduction
- The Risk-Based Capital Framework
- Risk Management Issues
Chapter 16 Issues in Securitization of Particular Asset Types
- Introduction
- Mortgage Loans
- Home Equity Lines of Credit
- Reverse Mortgage Loans
- Manufactured Housing Contracts
- Commercial Mortgage Loans
- Motor Vehicle Loans
- Boat Loans
- Credit Card Receivables
- Student Loans
- Marketplace Lending
- ABS and Other Securities
Chapter 17 Various Legal Issues to Consider in Securitizations
- Introduction
- Legal Investment: Restrictions on Investment by Regulated Institutions
- Derivatives
- The Trust Indenture Act
- Blue Sky Laws
- FINRA Regulations
- The Servicemembers Civil Relief Act
- The Military Lending Act
- The Hart-Scott-Rodino Act
- Securities Laws of Foreign Jurisdictions
- The NRSRO Website
Chapter 18 The Future of the Regulation of Securitization
- A Pause in Federal Regulatory Activity
- Potential Changes to Regulation AB
- Potential Changes to Credit Risk Retention Rules
- Potential Changes to Investment Company Act Exemptions
- Potential Changes to the Volcker Rule
- Conflict of Interest Rule
Appendix 1: Securitization Issues Checklist
Appendix 2: Disclosure Compliance Checklist
Appendix 3: Sample Due Diligence Procedures and Questions
Appendix 3A: Sample Procedures and Questions for Initial Diligence
Appendix 3B: Sample Procedures and Questions for Periodic Diligence Update
Appendix 4: Summary of Certain Reporting Obligations
Table of Cases
Index
