Category Archives: TERM LOANS DEBENTURES BONDS AND SECURITISATION

Treatment of Conversion of Loans

Treatment of Conversion of Loans In case of conversion by the borrowers of a loan from fixed rate or vice-versa, or to a lower fixed rate, the loan would continue to remain in the receivables pool. The profit loss on account of change in the interest rate would accrue to be come by the receivables pool and indirectly the Class PTC-holders. The conversion charge received from borrowers who have exercised the opti

Treatment of Prepayments on the Loans

Treatment of Prepayments on the Loans Borrowers are permitted to prepay their loans in full or may be charged a prepayment for the same. Such prepayments in the receivables pool are passed on entirely to the two classes of PTC-holders. This has the accelerating the repayment of PTC-holders, thus, reducing the effective tenure of the PTCs. Historically, HDFC has experienced prepayment in its individual housing l

Recovery on Defaults and Enforcement of Mortgages

Recovery on Defaults and Enforcement of Mortgages The HDFC would administer the housing to the borrowers, in its capacity as the S&P Agent. Administering of such-loans would follow-up for the recovery of the EMIs from the borrowers in the event of delays. In such HDFCs practice to charge the borrowers certain out-of-pocket expenses incurred by recovery of the money due. The entire amount of actual recovery

Hierarchy of Monthly Distribution

Hierarchy of Monthly Distribution The S&P Agent (HDFC) would be responsible for distribution of the collections, from the receivables pool to the PTC-holders and the various service providers available for distribution would include the entire monthly collections including penal collections against overdues less any unapproved advance payments received from the hierarchy of monthly distribution of the pool c

Corporate Guarantee from HDFC

Corporate Guarantee from HDFC The structure also envisages a credit enhancement for the made available upfront in the form of a non-funded corporate guarantee ftorn the stipulated amount of the guarantee is Rs 1.1 crore. In the event of defaults or delays by the borrowers, the HDFC would unconditionally deposit such amount into the Cash Collateral on being demanded by the trustee or the S&P Agent. Further,

Subordinated Class B PTC Pay-out

Subordinated Class B PTC Pay-out The Spy Trust is issuing two classes of PTCs as described previously. The predetermined hierarchy in the servicing of the two classes ensures that first losses are borne by the holders of the subordinated class, that is. the Class B PTCs. Subordination provides comfort to the Class A PTC-holders in two ways: – Firstly, residual cash flows that flow back each month to Class

Issue of Pass Through Certificates

Issue of Pass Through Certificates Once the housing loans have been declared as property held in trust, the NHB in its corporate capacity as also trustee for the SPV Trust would issue Pass Through Certificates (PTCs) to investors. The two classes of securities would be issued, that is, Class A and Class B PTCs. The Class A PTCs would be issued to investors, while the Class B PTCs would be issued to the HDFC (t

Declaration of Trust

Declaration of Trust The NHB is empowered under the NHB Act, to create trust(s) and transfer loans and advances (along with underlying securities where necessary) to such trust(s). Accordingly, after acquiring the housing loans, the NHB would make an express declaration of trust in respect of the pool, by setting apart and transferring the housing loans along with the underlying securities. It would also appoin

Registration of Deed of Assignment and Payment of Stamp Duty

Registration of Deed of Assignment and Payment of Stamp Duty Subsequent to the above purchase from HDFCs the receivables pool would be recorded as, an asset in the books of the NHB, till such time as it makes an express declaration of trust in respect of the pool. Subsequently, the NHB would hold the assets in the capacity as a trustee for the benefit of the PTC holders. Once the trust has been declared the as

Pool Valuation and Consideration for the Assignment

Pool Valuation and Consideration for the Assignment The consideration for the pool would be aggregate balance principal of the housing loans being acquired recorded as outstanding in books of the HDFC as on that out-off date. However, the NHB would not purchase any overdue EMIs or penal interest/out-of-pocket expense outstanding in the HDFC’s books as on the out-off-date. These amounts, as and when colle