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In a securitization, we helped a US residential real estate private investment fund avoid burdensome costs and administrative tasks by using a practice first used in the auto industry.
THE ASSETS
The assets were mortgage loans secured by residential real estate, as well as REO properties (“real-estate owned”—foreclosed—properties).
THE DIFFICULTY
In the United States, assignments of mortgage and transfers of deeds are handled by individual county recorder offices across the country.
Which takes considerable time and cost.
AN EXISTING SOLUTION
Auto lease securitizations also involve the tedious, regulated transfer of ownership documents—car titles.
An effective workaround has been to set up a titling trust, a special master trust that becomes and remains the cars’ owner of record.
A NOVEL APPLICATION
We set up a titling trust to transfer beneficial ownership of the mortgage loans and REO properties to specific securitization transactions without having to transfer legal title.
IF THERE, WHY NOT HERE?
Using titling trusts, structured finance transactions involving real estate are now enjoying the same efficiency found in auto lease transactions. (Read more about this application of a solution across industries in an article by our partner Jon Van Gorp.)