Medallion Bank Subordination Form

Instructions and help about Medallion Bank Subordination

hi this is David Harper a banach turtle I wanted to illustrate the idea of subordination in a securitization subordination along with over collateralization is a form of internal credit enhancement to do that I've simplified my diagram into a generic securitization structure so I'm not showing several of the key players including the underwriter the trustee the collateral manager but rather this is just a balance sheet perspective so on the Left we have a reference portfolio which contains the credit sensitive assets recall there are many different types and flavors of credits instead of assets nowadays given the credit crunch it's probably helpful to think about these as mortgage loans on the right we have the liabilities because the special-purpose entity has issued securities these are obligations to the investors who have really purchased an exposure to the credit risk on these assets now if we think about mortgage loans they pay principal and interest on a monthly basis so in term