Credit card securitization is the process of pooling cash flow and selling it as securities. The securities are then split into both revolving and amortization periods. The process of credit card securitization is important as most investors look into the credit card enhancements and the structure of underlying assets as a source of payment.
Credit card securitization provides financial institutions with risk management and useful funding tools. A credit card issuer whose credit cards are securitized can easily get access to costs of funding and the lender can also have the chance to possibly diversify their sources of funding.
The process of securitizing a credit card is almost similar to that of securitizing a mortgage or any other loan. This process is important as it leads to the development of more banks that specialize in issuance of credit cards as it provides a source of funding and risk transfer.
In credit card securitization, a card issuer sells accounts to a trust. This trust then issues securities that are backed by receivables. The issuer will still service the account but the assets are not in their balance sheets. This will allow the credit card issuer to reduce their capital requirements.
The credit card securitization report is a document that contains detailed information about the credit card securitization process. The reports are derived from an audit process that is conducted by an auditor. The process identifies and evaluates the effectiveness of the issuers fraud prevention process and to monitor the fraudulent activities that may have occurred in the credit card securitization process.
The auditor summarizes all the findings of the credit card processes and includes them in a report that may be used in case there is a follow up of the case in the court. For free consultation please go to https://www.mortgageauditsonline.com/
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