sybarite --
Thanks for your invitation to post my information as an answer.
After "sleeping on it," I believe that the source I provided in my
earlier comment is indeed compelling evidence that there is no S.E.C.
or other regulatory bar against a mortgage-based security being backed
by the assets of a single obligor. R.R. Donnelley is an extremely
reputable provider of services to the corporate law community, its
summary of the relevant law is clearly written, and its conclusion is
inescapable that one obligor is all that is required.
My initial hesitation about posting my information as an answer was
based on the notion that finding a dispositive primary source in the
form of an opinion letter from S.E.C. staff, e.g. would require
specialized research tools that I don't have convenient access to.
But, upon reflection, I, like you, think it is safe to rely on R.R.
Donnelley.
Here again is the Donnelley-based information, along with a brief
explanation of my search strategy:
Here are two paragraphs from Donnelley's detailed discussion of the larger
category of "asset-backed securities" that lead me to this tentative
conclusion:
First this:
"What is the difference between an "asset-backed security" and a
"mortgage-backed security"?
"The term "mortgage-backed security" typically refers to a security
backed by first mortgage loans. The term "asset-backed security"
typically refers to a security backed by any other type of asset,
including second mortgage loans and home equity loans.
"For the most part, the SEC does not make this distinction. In its
rules, regulations, and forms, the term "asset-backed security"
generally refers to a security backed by any type of self-liquidating
financial asset, including first mortgage loans. The term is used here
in a similar manner."
R.R. Donnelley: Real Corporate Lawyer: Asset-Backed Securities (para.
http://www.realcorporatelawyer.com/faqs/absfaq.html
And then this, from the same source:
"Are there any special disclosure rules an ABS issuer must consider
when there are concentrations within the pool of assets backing an
offering of ABS?
"Yes. In comment letters, the Division of Corporation Finance staff
has instructed that if the pool of underlying assets backing an ABS
includes a recourse loan (or a group of recourse loans) - or an ABS
(or a group of ABS) relating to a single underlying obligor or a group
of affiliated underlying obligors with a principal amount equal to 20%
or more of the principal amount of the ABS being registered - the
financial statements of such obligor or group of affiliated obligors
should be included in the prospectus.
"R.R. Donnelley: Real Corporate Lawyer: Asset-Backed Securities (para.
http://www.realcorporatelawyer.com/faqs/absfaq.html"
Search Strategy:
I used several increasingly narrowed Google searches to find the information:
"mortgage backed security OR securities"
://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLB,GGLB:1969-53,GGLB:en&q=%22mortgage+backed+security+OR+securities%22
"mortgage backed security OR securities" "pool is"
://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLB,GGLB:1969-53,GGLB:en&q=%22mortgage+backed+security+OR+securities%22+%22pool+is%22
"mortgage backed security OR securities" pool "at least"
://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLB,GGLB:1969-53,GGLB:en&q=%22mortgage+backed+security+OR+securities%22+pool+%22at+least%22
security OR securities" pool defined OR definition
://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGLB,GGLB:1969-53,GGLB:en&q=%22mortgage+backed+security+OR+securities%22+pool+defined+OR+definition%22
I also took a look at the instructions for SEC Form S-3 (Registration
Statement), which didn'tspeak directly to the issue.
I am (now) confident that this is the information you wanted. If
anything is unclear, please ask for for clarification before you rate
the answer.
markj-ga |
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2 Comments
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