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THE TRANSACTION

 
The transaction involves:

a) Assignment and Transfer of a pool of housing loans along with the underlying mortgages, from the primary lending institution to NHB.

b) Securitisation of Mortgage Debt: On acquiring the pool along with the underlying mortgages, an express declaration of trust will be made by NHB in respect of the mortgage debt, appointing itself as the trustee for the benefit of the investors. Once the assets have been declared property in trust (“the Trust”), the Trust will issue PTCs to investors.

STEP NO. 1
  • Authorisation for securitisation by originator: Originator to obtain authorisation from its relevant internal highest authority for securitization its pool of home loans.
  • Intimation to NHB : The originator (HFC / Bank) to write a formal letter to NHB indicating its intention to securitize its home loans with copies of relevant authorization of its relevant authorities (for instance Board Resolution) and proposal to go ahead with securitisation of its home loan portfolio with NHB’s SPV arrangement.

STEP NO. 2

SELECTION OF POOL OF LOANS

TIME FRAME: AS PER ORIGINATOR’S CONVENIENCE
  • NHB’s Pool Selection Criteria (given separately) – the home loans should satisfy the standards for being considered for selection in the Mortgage Pool offered for securitisation.
  • Identification of Geographic Locations for Selection of Loans –To begin with, loans originated in Tamil Nadu, Gujarat (compulsory), Karnataka, Maharashtra, and West Bengal may be considered.
  • Initial Pool Size Decision (by Originator in consultation with NHB)
  • Supply of Initial Pool Information to NHB

STEP NO. 3

DUE DILIGENCE & RATING OF THE MORTGAGE POOL (may be done simultaneously)

  • Appointment of Rating Agency by Originator (for AAA(So) Rating) (in consultation with NHB)
  • Supply Pool Information to Rating Agency
  • Commencement of Rating Process
  • Award of Rating by Rating Agency

(b)

  • Appointment of Auditors for Due Diligence Audit of Mortgage Pool (with consultations between NHB and Originator)
  • Verification of Mortgage Pool by Auditors for certifying Due-diligence (Auditors may be Statutory Auditors of Bank/HFC or a Chartered Accountancy Firm)
  • Completion of Due Diligence Audit and Certification by Auditors

STEP NO. 4

(MAY BE DONE SIMULTANEOUSLY WITH STEP 5, AS OFFER DOCUMENT IS A PART OF MEMORANDUM OF AGREEMENT TO BE EXECUTED BETWEEN NHB & BANK)

  • Appointment of Issue Arranger(s) by NHB – (On consultations between NHB and Originator)
  • Preparation of Offer Document by Issue Arrangers

STEP No. 5EXECUTION OF MEMORANDUM OF AGREEMENT WITH NHB

  • Draft Agreement to be sent from NHB to Bank/HFC
  • Finalisation of Agreement by Bank/HFC
  • Signing the Agreement by NHB and Originator
STEP NO. 6
  • ISSUE OPENS
  • RECEIPT OF APPLICATION MONEY BY NHB
  • ISSUE CLOSES
  • FINALIZATION OF ALLOTMENT BY NHB AND ISSUE ARRANGERS
  • ISSUE OF ALLOTTMENT LETTER TO INVESTORS BY NHB (IMMEDIATELY AFTER FINALIZATION OF ALLOTMENT)
  • PAYMENT OF CONSIDERATION BY NHB TO ORIGINATORS (SIMULTANEOUSLY WITH ISSUE OF ALLOTMENT LETTER TO INVESTORS)

STEP No. 7

PAY-OUTS TO INVESTORS ON STIPULATED PAY-OUT DATE(S)


STEP No. 8

DOCUMENTATION

  • Execution of:- Deed of Assignment
    – Deed of Declaration of Trust
    – Servicing and Paying Agency Agreement
    – Any other Document(s)
  • Registration of Documents (Deed of Assignment and Declaration of Trust) at the Office of Sub-Registrar of Assurances

(NHB shall provide all legal and advisory support pertaining to execution of documents at Gujarat. For the purpose of local coordination at Gujarat, the Originating HFC /Bank may engage an advocate in consultation with NHB).

OTHER ACTIVITIES

  • SUBMISSION OF MONTHLY MIS REPORTS TO NHB BY S&P AGENT.
  • MONTHLY SURVEILLANCE BY CREDIT RATING AGENCY
  • SEMI-ANNUAL AUDIT REPORTS SUBMISSION BY S&P AGENT TO NHB SPV TRUST
  • PERIODIC INSPECTION AND AUDIT BY NHB SPV TRUST