Treatment of financial assets transferred in connection with a securitization or participation.

CFR · 2024-01-01 · US · Title 12

(a) (1) The Federal National Mortgage Association and any affiliate thereof; (2) Federal Home Loan Mortgage Corporation and any affiliate thereof; (3) The Government National Mortgage Association; and (4) Any Federal or State sponsored mortgage finance agency. (1) The conveyance of a financial asset or financial assets to an issuing entity; or (2) The creation of a security interest in such asset or assets for the benefit of the issuing entity. (b) (1) (i) (B) The documents creating the securitization must require that payment of principal and interest on the securitization obligation will be primarily based on the performance of financial assets that are transferred to the issuing entity and, except for interest rate or currency mismatches between the financial assets and the obligations, will not be contingent on market or credit events that are independent of such financial assets. The securitization may not be an unfunded securitization or a synthetic transaction. (ii) (B) The credit quality of the obligations cannot be enhanced at the issuing entity or pool level through external credit support or guarantees. However, the credit quality of the obligations may be enhanced by credit support or guarantees provided by Specified GSEs and the temporary payment of principal and/or interest may be supported by liquidity facilities, including facilities designed to permit the temporary payment of interest following appointment of the NCUA Board as conservator or liquidating agent

official document · source cfr-2024 · id 12:§ 709.9