CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

In the securitization process, the SPV ______.

I. originates the loans
II. issues asset-backed securities to investors
III. services the loans
Correct Answer: II only

The SPV buys the loans from the seller and issues the asset-backed securities.

User Contributed Comments 4

User Comment
aap2406 Can SPV also act as a servicer ?
Inaganti6 That's the job of the borrower I think
Inaganti6 Actually no SERVICED is the SPV services job is to pay up
Kiniry The servicer is usually the originator. Think of your mortgage as an example: You continue to make all payments to your bank, it doesn't matter if they've repackaged your loan into a MBS, and you probably wouldn't know even if they did. By collecting payments from you, your bank is acting as the servicer of the loan.
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