Relationship Analysis Of Loan Asset Securitization

"Loan asset Securitization"is actually a kind of structural financing action ,that banking financial institute as a originator will trust the loan asset to trustee, which usually issues beneficiary securities to invest institutions in the form of asset-backed securities ,and from which the cash arises is usually used to pay for the benefit of asset-backed securities. In legal essence, loan asset Securitization is a perfect product which is combined circulate securities with loan asset as reputation guarantee in the process that legal right gets away from identity to realize independent property turn.Across to Loan asset securitization experimental Management bylaws(Experimental Bylaws called briefly as follow) enacted by Chinese People's Bank and CBRC, Chinese Loan asset Securitization usually is subject to mechanism of Special Purpose Trust."Trust Law of China"brings winder system space for Loan asset Securitization.Trust Company Management Bylaws,Trust Company Congregated capital Trust Plan Managemnt Bylaws and so forth provide it for practical basis. But the relationship system of Loan asset Securitization structured by laws and regulations above is not perfect. Experimental Bylaws is just a regulative test with legal means ,which is still suspicious as to practical eligibility , beneficiary balance of parties concerned, so we should study the relationship of Loan asset Securitization deeply.The relationship system of Loan asset Securitization attempts to construct venture remoteness mechanism to realize financing efficiency and safety target. In the process, we also should analogy specific relationship, find advantage and disadvantage, protect parties who are easy to be tort, and enhance practice-oriented of law.The process of Loan asset Securitization generally concludes designation, credit enhancement, establishment of trust, issuance of Asset-backed securities, deal of Asset-backed securities, payment of beneficiary investors, which need varieties of parties to complete together. The parties of relationship of Loan asset Securitization are those who participate in the course of Loan asset Securitization, possess rights, and bear obligations. In China they are primarily originators, trustees, investment institutes, loan service institutes, capital security institutes, credit enhancement institutes, and so forth, among which originators, trustees, investment institutes are most important. They are central parties of the relationship of Loan asset Securitization.Because three central parties are important to the whole Loan asset Securitization, Experimental Bylaws provides more detailed requisitions: originators are subject to banking financial institutes; trustees are subject to trust company or others authorized by CBRC; investors are subject to banking institutional investors authorized to enter into securities market. Such arrangement may be the result of wariness for test. Accompanying with further opening of Chinese financial market and further perfect of relative laws, more sorts of parties will participate in the process of Loan asset Securitization.The object of relationship of Loan asset Securitization means what the parties'right and obligation designate to, which primarily concludes Loan asset Securitization, cash current, Asset-backed securities.Loan asset is amount of money asset possessing independent value and producing interest characteristic, which is irreplaceable part of banking assets. There is a time lag in the process of issuance and redemption of loan asset, which creates impossibility and necessity for securitization. Whereas not all the loan asset can be securitized, that is not universal. To be the object of relationship of Loan asset Securitization, there are both specific requirement for the conditions or choice of loan asset ,so as to reduce financing venture.The cash current produced by debtors in the course of payment for interest and principal, are the basis for issuance of Asset-backed securities and costs for it. Independence of cash current is quite important. Distinction from cash current produced by securities dealing to assets possessed by trustees and loan service institutes and others, not only is advantageous to routine regulation, but also reserve the independence of trust assets to realize the purpose of venture remotement. Asset-backed securities are ultimate products of Loan asset Securitization in the course of financing innovation. Trustees issue to investors based on loan asset as trust asset, and lien to them with cash current produced by loan assets. Asset-backed securities are not belong to debenture securities. Trust company possesses the right to issue Asset-backed securities, which are not subject to Chinese present Security Law. But I insist that Asset-backed securities will be subject to Security Law to regulate issuance and dealing legally.The relationship of Loan asset Securitization is the most important among securitization relationships, the most controversy in theory and the most questionable in practice. This article analyzes the nutshell with the horizontal and Lengthways of ways and means to distinct complicated relationships of right and obligation. The purpose lies in finding a explicit way of thinking about The relationship of Loan asset Securitization, not a conclusive suggestion, even though as to specific legal relationship.The right lying on imitative securitization assets before trust establishing, is either varieties of rights resulting from securitization relationship, such as originators, or special to transition of loan assets, such as the right of rescission of creditors and the right of offset of debtors.The course from loan asset transition and right or obligation relationship of trust establishing, to venture remoteness system, primarily concludes right or obligation about valid transition, such as the right of rescission of creditors, the right of contradiction and offset of debtors, the right of mortgage of originators, notice obligation of loan transition, the obligation of information exposure, and so forth.In terms of trust existence, distribution of right and obligation among originators, trustees, investors embodies internal trust relationship central with trustees. The issue is also the most sensitive question about securitization interest, which is valued in law and trust contrast. The right and obligation of this nutshell primarily conclude The right and obligation of trustees, originators and so forth, of which the right and obligation of originators and investors distribution is not balance in Chinese present legal system. The more right of originators is enough to impair the right of investors.Venture remoteness system constructed in the form of trust, can get right of recourse of creditors of originators, trustees and investors away from trust assets, which doesn't mean that Loan asset Securitization can help parties of internal trust relationship get rid of claims of external trust relationship. The claims of external trust relationship can also threat the realization of Loan asset Securitization.Beneficiary right of investors means the right that invest institutes as beneficiary acquire principal and interest of asset-backed securities following with written compact in the process of loan asset securitization. Beneficiary right is the most fundamental right for beneficiary. Contrasting to beneficiary right of investors is payment obligation of trustees.The article bases on Trust Law, Experimental Bylaws, Management Bylaws and so forth, which analyzes the relationship of loan asset securitization in present China, concludes basic legal property of subject and object, and combs complicated relationships. The purpose of the article doesn't lie in reconstruct of a series of relationships, because it will be a long-term and complex duty, which can't be solved only by millions of words. I will do a try to analyze and distinct the complicated relationship system, and supply a way of thinking for securitization law of the new-born object in China.