Securitization

Summary

This practice note discusses securitization, a process through which rights to a future stream of payments are converted into securities supported primarily by financial assets that represent the rights to the future stream of payments. This process permits a lender to convert the future stream of payments into cash so that, for instance, the lender may use that cash to make more loans. See Section I.A., SEC Release No. 33-9117 (April 7, 2010). As simple as that sounds, the process typically involves several participants, numerous legal issues and multiple legal disciplines. Accordingly, a lawyer should understand that a securitization transaction requires the efforts and collaboration of a team consisting of several parties.