Who are the key players in securitization?
To accomplish securitization it requires several key professionals. As we learned yesterday initially there is a lender and a borrower. Today we identify the professional players in the investment selling and buying of the cash flow from all those loans. Let’s start with the originator. Originator – The originator is a bank or lender that makes loans to people or corporations and other business entities. The loans could be people like you and I who buy cars, trucks and houses. Loan payments are cash flow. Whoever owns the loan, the paper, owns the right to receive the loan payments or cash flow. Holding loans requires lenders to maintain a certain amount of capital, money and assets, as a percentage of the value of loans. Meaning (as way of an example) if you lend $1 million you might have to have $100,000 in cash in your accounts. This reserve maintains the integrity of the banking system to be able to cover bad loans. Banks or lenders might wish to convert loans to cash; and that is
