Mr Cooper Group Inc fka COOP

[deekshant]

Safe Harbor: How is this not relevant to us

Catz:
More important though, is understanding what the "Safe harbor" process is for, and whom it protects, and why it was created in the first place.

Hint. Not WMB, Not WMI. Not WMILT.

Catz, I have not followed the thread, so, just posting based on your input. What has retained interest in securitized assets got to do with understanding the reason behind "Safe Harbor" definition. Is "Safe Harbor" not a part of Securitization. And, if its not WMB or WMI, then, can you explain how WMI/WMB has/had retained interest in them

WMI-10K Page 47
Off-Balance Sheet Activities and Contractual Obligations Asset Securitization

The Company transforms loans into securities through a process known as securitization. When the Company securitizes loans, the loans are usually sold to a qualifying special-purpose entity ("QSPE"), typically a trust. The QSPE, in turn, issues securities, commonly referred to as asset-backed securities, which are secured by future cash flows on the sold loans. The QSPE sells the securities to investors, which entitle the investors to receive specified cash flows during the term of the security. The QSPE uses the proceeds from the sale of these securities to pay the Company for the loans sold to the QSPE. These QSPEs are not consolidated within the financial statements since they satisfy the criteria established by Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In general, these criteria require the QSPE to be legally isolated from the transferor (the Company), be limited to permitted activities, and have defined limits on the types of assets it can hold and the permitted sales, exchanges or distributions of its assets.

When the Company sells or securitizes loans that it originated, it generally retains the right to service the loans and may retain senior, subordinated, residual, and other interests, all of which are considered retained interests in the sold or securitized assets. Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.71 billion at December 31, 2007, of which $1.56 billion are of investment grade quality. Retained interests in credit card securitizations were $1.84 billion at December 31, 2007, of which $426 million are of investment grade quality. Additional information concerning securitization transactions is included in Notes 7 and 8 to the Consolidated Financial Statements – "Securitizations" and "Mortgage Banking Activities."
http://www.secinfo.com/dVut2.t21c.htm#1stPage