Key parties, documents and terms of a residential mortgage-backed securities transaction
Produced in partnership with Ed Bellamy, Victoria Morton and Charlie How of Paul Hastings LLP
Key parties, documents and terms of a residential mortgage-backed securities transaction

The following Banking & Finance guidance note Produced in partnership with Ed Bellamy, Victoria Morton and Charlie How of Paul Hastings LLP provides comprehensive and up to date legal information covering:

  • Key parties, documents and terms of a residential mortgage-backed securities transaction
  • An introduction to RMBS
  • The key parties in RMBS transactions
  • Principal documents and key terms

BREXIT: The UK is leaving the EU on Exit Day (as defined in the European Union (Withdrawal) Act 2018). This has an impact on this Practice Note. For guidance, see Practice Note: Brexit—impact on finance transactions—Brexit planning and impact—financial services, Brexit—impact on finance transactions—Key issues for securitisation transactions and Brexit—impact on finance transactions—Derivatives and debt capital markets transactions—key SIs.

An introduction to RMBS

This Practice Note provides a summary of the structure of residential mortgage-backed securities transactions and the key parties, documents and terms involved in such transactions. As with all financing techniques and transactions there are numerous variations as to how the precise terms of each such transaction operates which are beyond the scope of this Practice Note.

Residential mortgage-backed securities (RMBS) are a type of note whereby the income generated by one or more pools of residential loans (loans) is used to fund the payments of interest and principal to noteholders. Security is taken over the loans and the related mortgages as collateral for the payment of amounts due on the notes. RMBS transactions can be relatively simple pass-through instruments or can be complex transactions which include many parties and may be structured in various forms. The key features of a single issuance RMBS are summarised as follows:

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  1. A newly incorporated insolvency remote special purpose vehicle