I. Transfer
Transfer means that the sponsor directly transfers the basic assets to SPV without changing or terminating the original contract, that is, the transaction does not involve the original debtor. The corresponding concept in civil law is assignment of creditor's rights. According to the general rules of American contract law, as long as the original obligee (promoter) and the new obligee (spy) reach an assignment agreement, the assignment will take effect between the two parties, without the debtor's consent or notice, and without other further actions. However, in order to constitute an effective assignment, that is, to have effect on the debtor, it is not enough for the seller to indicate the meaning of "assignment" in the agreement, and he must also send a notice of assignment to the debtor. However, if the promoters continue to serve as the asset pool, they may be exempted from this notification obligation. If there is an agreement in the original contract between the two parties to restrict the transfer, the transfer agreement is not effective for the debtor. Transfer is a simple and cost-saving transfer method, and it is also the most commonly used transfer method in the process of securitization.
Second, the debt extension.
That is, the creditor-debtor contract between the sponsor and the original debtor is terminated first, and then SPV and the original debtor sign a new contract according to the terms of the original contract, thus transforming the creditor-debtor relationship between the sponsor and the original debtor into the creditor-debtor relationship between SPV and the original debtor. Renewal is an effective and strict way to transfer assets, so there is no legal obstacle in any jurisdiction. However, this method also has some disadvantages that cannot be ignored: because the contract between SPV and the original debtor needs to be re-signed, this method is cumbersome, time-consuming and laborious. Only when the number of original debtors is small can securitization adopt this method.
Third, partial participation.
In this way, there is no contractual relationship between SPV and the asset debtor, and the basic contract between the sponsor and the original debtor continues to be valid. Assets do not have to be transferred from the sponsor to the special purpose company. SPV first issues asset-backed securities to investors, and then reloans the raised funds to the sponsors, the amount of which is equal to the portfolio value. Investors' loans to SPV and SPV's loans to sponsors are all accompanied by recourse. The funds for SPV to repay the loan come from the income generated by the portfolio.