This refers to credit support required on top of the mortgage collateral. It is done to attain a desirable credit rating on mortgage-backed securities. Credit enhancement comes in the form of over-collateralization, subordination, corporate guarantees, letters of credit, and reserve funds.
Credit enhancement
This refers to credit support required on top of the mortgage collateral. It is done to attain a desirable credit rating on mortgage-backed securities. Credit enhancement comes in the form of over-collateralization, subordination, corporate guarantees, letters of credit, and reserve funds.
