DOCSLIB.ORG

Module 4: Manual Underwriting of the Borrower

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Module 4: Manual Underwriting of the Borrower Single Family Housing Policy Handbook 4000.1 - Title II Insured Housing Program Forward Mortgages Origination through Post-Closing/Endorsement Module 4: Manual Underwriting of the Borrower As of June 30, 2016 Presented by: Eric McDowel, Senior Underwriter John Phillips, Branch Chief Philadelphia Homeownership Center The information in this document is current as of the Last Update date noted above. This document does not establish or modify the policy contained in FHA’s Handbooks and Mortgagee Letters in any way. FHA’s Office of Single Family Housing Training Module 2 FHA’s Office of Single Family Housing Training Module Introduction The Manual Underwriting of the Borrower section of the Handbook provides Mortgagees FHA’s policy requirements to determine a borrower’s ability to obtain FHA insured single- family financing considering: – Creditworthiness; – Effective income; and Income – Assets. Credit Assets Manual Underwriting Borrower 3 FHA’s Office of Single Family Housing Training Module Manual Underwriting of the Borrower 4 FHA’s Office of Single Family Housing Training Module Manual Underwriting Requirements The Mortgagee must manually underwrite those applications where: • TOTAL issues a Refer; • The application was downgraded to a manual underwrite; or • FHA programs requires manual underwriting for the application. 5 FHA’s Office of Single Family Housing Training Module Accept Risk Classifications Requiring a Downgrade to Manual Underwriting A mortgage that received an Accept recommendation must be downgraded if: • The mortgage file contains information or documentation that cannot be entered into, or evaluated by TOTAL Mortgage Scorecard; • Additional information, not considered in the AUS recommendation, affects the overall insurability of the Mortgage; 6 FHA’s Office of Single Family Housing Training Module Accept Risk Classifications Requiring a Downgrade to Manual Underwriting (cont.) • The Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts; • The case number assignment date is within three years of any of the following events: – The date of the transfer of title through a Pre-Foreclosure Sale (Short Sale); – The date of the transfer of title through a foreclosure sale; – The date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure; 7 FHA’s Office of Single Family Housing Training Module Accept Risk Classifications Requiring a Downgrade to Manual Underwriting (cont.) • The date of the Borrower’s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment; • The Mortgage Payment history requires a downgrade as defined in Housing Obligations/Mortgage Payment History; • The Borrower has undisclosed mortgage debt; or • Business income shows a greater than 20 percent decline over the analysis period. 8 FHA’s Office of Single Family Housing Training Module General Credit Requirements 9 FHA’s Office of Single Family Housing Training Module General Credit Requirements • Mortgagees must analyze the following to determine the Borrower’s creditworthiness: – Credit history; – Liabilities; and – Debts. 10 FHA’s Office of Single Family Housing Training Module General Credit Requirements (cont.) • For each Borrower who will be obligated on the mortgage Note, the Mortgagee must either obtain a: – Tri-Merged Credit Report (TRMCR); or – Residential Mortgage Credit Report (RMCR) from an independent consumer reporting agency. • The Mortgagee may obtain a joint report for individuals with joint accounts. 11 FHA’s Office of Single Family Housing Training Module Non-Borrowing Spouse Community Property State: Consent and Authorization The Mortgagee must obtain a non-borrowing spouse’s consent and authorization where necessary to: • Verify specific information required to process the mortgage application, including the consent to verify their SSN with the Social Security Administration (SSA). 12 FHA’s Office of Single Family Housing Training Module Credit Report: Non-borrowing Spouse • The Mortgagee must obtain a credit report for a non- borrowing spouse who resides in a community property state, or if the subject property is located in a community property state. • The credit report must indicate the non-borrowing spouse’s SSN was matched with the SSA, or the Mortgagee must provide separate documentation indicating that the SSN was matched with the SSA. 13 FHA’s Office of Single Family Housing Training Module Credit Report: Non-borrowing Spouse (cont.) • Where a SSN does not exist for a non-borrowing spouse, the credit report must contain, at a minimum, the non-borrowing spouse’s full name, date of birth, and previous addresses for the last two years. • As a reminder, the Mortgagee does not submit the non- borrowing spouse credit report as part of the TOTAL Scorecard risk evaluation. 14 FHA’s Office of Single Family Housing Training Module Credit Requirements: Types of Credit History 15 FHA’s Office of Single Family Housing Training Module Types of Credit History Traditional Credit History Non-Traditional and Insufficient Credit • Tri Merge Credit Report (TRMCR ) or • Used for borrowers without a credit Residential Mortgage Credit Report score. (RMCR). • Mortgagees can obtain a non- • Includes all credit repository credit traditional credit report or data for an individual Borrower. independently build a credit history • A joint merged credit report will using credit references. include all credit data on two • Credit references may vary and there individual Borrowers. are preferred and alternative sources. • Reporting format may differ among • Verification types may also vary. credit repository agencies but they generally eliminate duplicate records when merging a joint credit report. 16 FHA’s Office of Single Family Housing Training Module Traditional Credit History: FHA’s Policy for Tri-Merged or Residential Credit Reports • If a traditional credit report is available, the Mortgagee must use a traditional credit report. • If the Borrower supports a credit score from either a Tri- Merged or a Residential Credit Report, the Borrower must be evaluated based on traditional credit policies. 17 FHA’s Office of Single Family Housing Training Module Traditional Credit History: FHA’s Policy for Tri-Merged or Residential Credit Reports • The Mortgagee must utilize, and include in the case binder, the same credit report and credit scores that were used for TOTAL Scorecard evaluation. • If a traditional credit report is not available, or the borrower has insufficient credit, the Mortgagee must develop the Borrower’s credit history using the requirements for Non- Traditional and Insufficient Credit. 18 FHA’s Office of Single Family Housing Training Module Non-Traditional and Insufficient Credit • Borrowers without a credit score, the Mortgagee must either obtain a: – Non-Traditional Mortgage Credit Report (NTMCR); or – Independently develop the Borrower’s credit history. 19 FHA’s Office of Single Family Housing Training Module Non-Traditional Mortgage Credit Report (NTMCR) An NTMCR is designed to access the credit history of a Borrower who does not have the types of trade references that appear on a traditional credit report and used either as: – A substitute for a TRMCR or an RMCR; or – A supplement to a traditional credit report that has an insufficient number of trade items reported to generate a credit score. 20 FHA’s Office of Single Family Housing Training Module NTMCR: Standard • Mortgagees may use a NTMCR developed by a credit reporting agency that verifies the following information for all non-traditional credit references: – The existence of the credit providers; – That the credit was actually extended to the Borrower; and – The creditor has a published address or telephone number. • The NTMCR must not include subjective statements such as “satisfactory” or “acceptable,” and must be formatted in a similar fashion to traditional references. 21 FHA’s Office of Single Family Housing Training Module Independent Verification of Non-Traditional Credit Providers • Mortgagees may independently verify the borrower’s non- traditional credit references. • To conduct this verification, Mortgagees must document: – The existence of the credit provider; and – That the provider actually extended the credit to the Borrower. 22 FHA’s Office of Single Family Housing Training Module Non-Traditional Credit Providers: Verifications Existence of Credit Credit Information Rental Payment Provider Review public records Published address or Obtain a rental reference from the state, county, or telephone number for the from the appropriate city or other documents credit provider (do not rely rental management providing a similar level solely on information company (not from a of objective information. provided by the applicant) Family Member), AND demonstrating the timing Most recent 12 months of of payment of the most cancelled checks, or recent 12 months in lieu equivalent proof of of 12 months of cancelled payment, demonstrating the checks or equivalent timing of payment to the proof of payment. credit provider. 23 FHA’s Office of Single Family Housing Training Module Sufficiency of Credit References • To be sufficient to establish the Borrower’s credit, the credit history must include three credit references, including at least one or more from the list below: – Rental housing payments; – Telephone service (cellphone is acceptable); and – Utilities (not included in rent): . Gas; . Electric; . Water; . Television service; and . Internet. 24 FHA’s Office
Load more

Recommended publications
  • Initial Public Offerings
    November 2017 Initial Public Offerings An Issuer’s Guide (US Edition) Contents INTRODUCTION 1 What Are the Potential Benefits of Conducting an IPO? 1 What Are the Potential Costs and Other Potential Downsides of Conducting an IPO? 1 Is Your Company Ready for an IPO? 2 GETTING READY 3 Are Changes Needed in the Company’s Capital Structure or Relationships with Its Key Stockholders or Other Related Parties? 3 What Is the Right Corporate Governance Structure for the Company Post-IPO? 5 Are the Company’s Existing Financial Statements Suitable? 6 Are the Company’s Pre-IPO Equity Awards Problematic? 6 How Should Investor Relations Be Handled? 7 Which Securities Exchange to List On? 8 OFFER STRUCTURE 9 Offer Size 9 Primary vs. Secondary Shares 9 Allocation—Institutional vs. Retail 9 KEY DOCUMENTS 11 Registration Statement 11 Form 8-A – Exchange Act Registration Statement 19 Underwriting Agreement 20 Lock-Up Agreements 21 Legal Opinions and Negative Assurance Letters 22 Comfort Letters 22 Engagement Letter with the Underwriters 23 KEY PARTIES 24 Issuer 24 Selling Stockholders 24 Management of the Issuer 24 Auditors 24 Underwriters 24 Legal Advisers 25 Other Parties 25 i Initial Public Offerings THE IPO PROCESS 26 Organizational or “Kick-Off” Meeting 26 The Due Diligence Review 26 Drafting Responsibility and Drafting Sessions 27 Filing with the SEC, FINRA, a Securities Exchange and the State Securities Commissions 27 SEC Review 29 Book-Building and Roadshow 30 Price Determination 30 Allocation and Settlement or Closing 31 Publicity Considerations
    [Show full text]
  • Mortgage Record Changes
    Single Family FHA Single Family Servicing > Mortgage Record Changes Mortgage Record Changes The Mortgage Record Changes menu on the FHA Connection provides options for reporting a change in an FHA case to HUD, including a servicer and/or holder change, mortgage assumption (borrower change), FHA mortgage insurance termination, discontinuance of monthly mortgage insurance premium payments, or loan modification. Changes are made immediately and can be verified using Lender Query by Case Number. (For further information, see the Lender Query by Case Number module of this FHA Connection Guide.) To report a change or undo a change reported in error, see Contacts for Changes to FHA Insured Case Data on the HUD.GOV website at: https://www.hud.gov/program_offices/housing/comp/premiums/sfdqrep. Note: Lenders can also report changes through Electronic Data Interchange (EDI) or FHA Connection Business to Government (FHAC B2G). This FHA Connection Guide module includes: • Getting to the Mortgage Record Changes Menu • Reporting a Servicer and/or Holder Change (Transfer) • Reporting a Mortgage Assumption (Borrower Change) • Terminating FHA Mortgage Insurance • Discontinuing Monthly Premium Payments • Reporting a Non-incentivized Loan Modification Getting to the Mortgage Record Changes Menu To get to the Mortgage Record Changes menu (Figure 1), sign on to the FHA Connection and follow this menu path: Single Family FHA > Single Family Servicing > Mortgage Record Changes. Figure 1: Mortgage Record Changes menu Updated: 10/2017 Mortgage Record Changes - 1 Single Family FHA Single Family Servicing > Mortgage Record Changes After selecting a menu item, Help is available by clicking in the upper right corner of the page displayed (Figure 2).
    [Show full text]
  • Housing Counseling 101 for the Homeowner Who Wants to Know More
    Housing Counseling 101 For the homeowner who wants to know more Community Education Series Options in Foreclosure MSU is an affirmative-action, equal-opportunity employer. OPTIONS IN FORECLOSURE Washtenaw County MSUE Mortgage Foreclosure Intervention Program (734) 222-9595 The Michigan State University Extension Mortgage Foreclosure Intervention Program works in partnership with the Washtenaw County Treasurer‟s Office, Housing Bureau for Seniors, and Legal Services of South Central Michigan. We provide mortgage foreclosure intervention counseling to help homeowners sort through options available to resolve a housing crisis. The following pages provide an overview of important information for homeowners struggling with a mortgage crisis. Where are You in the Foreclosure Time Line?..…………..2 Keeping Your Home……………………………………….3 How Do I Write a Hardship Letter?.……………………….8 When You Can‟t Keep Your Home………………………..9 Let Foreclosure Happen…………………………………..12 Life After Foreclosure…………………………………….13 Options After the Sheriff‟s Sale…………………………..14 Additional Information about Sheriff‟s Sales…………….16 Mortgage Forgiveness Debt Relief Act of 2007………….18 Cancellation of Debt 1099-c……………………………...18 Consumer Alert: Scams…………………………………..19 Referrals…………………………………………………..21 The Mortgage Foreclosure Intervention Program is available to meet with homeowners face to face in our office on Zeeb Road. Please call 734-222-9595 to schedule an appointment. Pamela Sarlitto Certified Housing Counselor Program Services Foreclosure Intervention Counseling Community Education Presentations Workshops and Seminars on Topics of Financial Literacy 1 MSU is an affirmative-action, equal-opportunity employer. Last Updated January 2012 OPTIONS IN FORECLOSURE Washtenaw County MSUE Mortgage Foreclosure Intervention Program (734) 222-9595 Section I: WHERE ARE YOU IN THE FORECLOSURE TIMELINE? When facing foreclosure, you can keep the house, sell the house, or allow the foreclosure to proceed.
    [Show full text]
  • UNDERWRITING AGREEMENT March 26, 2021 Intact Financial
    UNDERWRITING AGREEMENT March 26, 2021 Intact Financial Corporation 700 University Avenue, Suite 1500 Toronto, Ontario M5G 0A1 Attention: Mr. Frédéric Cotnoir Senior Vice President, Corporate and Legal Services and Secretary Ladies and Gentlemen: CIBC World Markets Inc. (“ CIBC ”) and National Bank Financial Inc. (“ NBF”, and together with CIBC, the “ Lead Underwriters ” and each a “ Lead Underwriter ”) and TD Securities Inc., BMO Nesbitt Burns Inc., RBC Dominion Securities Inc., Scotia Capital Inc., Barclays Capital Canada Inc. and Casgrain & Company Limited (collectively with the Lead Underwriters, the “ Underwriters ”, and each individually, an “ Underwriter ”), understand that Intact Financial Corporation (the “Corporation ”), a corporation incorporated under the laws of Canada, proposes, upon the terms and subject to the conditions contained herein, to create, issue and sell to the Underwriters $250 million aggregate principal amount of 4.125% Fixed-to-Fixed Rate Subordinated Notes, Series 1 due March 31, 2081 (the “ Notes ”). Upon and subject to the terms and conditions contained in this Agreement, the Underwriters hereby severally offer to purchase from the Corporation in their respective percentages set out in Section 14(a) hereof, and the Corporation hereby agrees to issue and sell to the Underwriters all but not less than all of the Notes at a price of $100 per $100 principal amount (the “ Offering Price ”). After a reasonable effort has been made to sell all of the Notes at the Offering Price, the Underwriters may subsequently reduce the selling price to investors from time to time. Any such reduction in the selling price to investors shall not affect the Offering Price payable by the Underwriters to the Corporation.
    [Show full text]
  • Climate Change: Active Stewardship Vs. Divestment
    HNW_NRG_B_Inset_Mask Climate change: Active Stewardship vs. Divestment At RBC Global Asset Management (RBC GAM)1, we believe that climate change is a material and systemic risk that has the potential to impact the global economy, markets and society as a whole. As an asset manager and fiduciary of our clients’ assets, we have an important responsibility to consider all material factors that may impact the performance of our investments. In 2020, we took steps to formalize the actions we are taking to address climate change with the launch of Our approach to climate change. A cornerstone of this approach is active stewardship as an effective mechanism to motivate companies to build strategies that enable climate mitigation* and adaptation**. Some investors who are concerned about the impact of in extreme cases, the filing of lawsuits. As global investors climate change and are seeking to align their investment continue to integrate climate change into their investment strategies with these views have chosen a divestment decisions, active managers use both engagement and proxy approach. While RBC GAM does offer divestment solutions, voting as a means of better understanding and influencing we believe that the best approach to support the transition the activities or behaviour of issuers. to a low-carbon economy is through active stewardship. Engagement Active stewardship Engagement involves meeting with the boards and Active stewardship refers to the suite of actions investors management of issuers, typically corporations, and learning can take to better understand and influence the activities or about how they are approaching strategic opportunities and behaviour of issuers. It can be thought of as a conversation material risks in their business.
    [Show full text]
  • Mergers and Acquisitions in the U.S. Insurance Sector by Edward Best, Lawrence Hamilton and Magnus Karlberg1
    Article December 2015 Mergers and Acquisitions in the U.S. Insurance Sector By Edward Best, Lawrence Hamilton and Magnus Karlberg1 Introduction • a highly specialized, capital-intensive, and seasoned industry with high barriers to entry; and This practice note discusses recent trends in private merger and acquisition (M&A) • an industry that has developed over many transactions in the U.S. insurance sector and centuries with its own terminology and explores some central aspects of successfully particularities, which can be difficult for structuring, negotiating, and documenting an outsiders to penetrate. insurance M&A transaction. It also addresses While this article will discuss various ways in considerations that are specific to, or assume which insurance M&A transactions can be more importance in, M&A transactions in the structured, it will focus on the due diligence and insurance industry. Such considerations affect negotiation issues in a “classic” insurance M&A nearly every stage of the M&A process, transaction—namely, the acquisition by an including: acquirer from a seller of all of the common stock • structuring the deal; of a stock insurance company. • due diligence; The Insurance Business • negotiating the terms of the purchase and sale agreement; and Generally speaking, insurance is a mechanism for contractually shifting the burden of a number • addressing post-closing matters. of pure risks by pooling those risks. A pure risk Although the structure and terms of insurance involves the chance of a loss or no loss (but no M&A transactions vary, the following factors chance of a gain). The purchaser of an insurance affect all insurance M&A deals: contract must be subject to a pure risk of • the insurance business model, which is based incurring an economic loss (i.e., must have an on the management of potentially large and “insurable interest”).
    [Show full text]
  • Options in Foreclosure
    OPTIONS IN FORECLOSURE Washtenaw County MSUE Mortgage Foreclosure Intervention Program (734) 222-9595 Section IV: WHEN YOU CAN’T KEEP YOUR HOME A mortgage crisis can be a stressful time during which many decisions must be made by the homeowner. When the homeowner avoids dealing with the crisis, it can mean a loss of control over their finances and a loss of control over the impact the mortgage crisis may have on their credit report. If it is determined that you can’t keep your home after a review of your finances and conversations with your lender and housing counselor, there are still options available to you to AVOID a foreclosure on your credit report. I. STRAIGHT SALE: Even in a bad housing market, put the house up for sale with a reputable realtor at a fair market price. Interview the realtor to be sure they have experience with foreclosures and short sales. 1. Ask the lender to delay the foreclosure and for permission to complete a pre-sale. GET THE AGREEMENT IN WRITING. 2. In a bad real estate market, do not assume that the house will sell quickly. 3. A pre-sale works if the sale price is high enough to pay off the mortgage, any home equity loans, back taxes, selling expenses, and foreclosure fees. II. SHORT SALE: The lender may allow you to complete a sale even though the price is less than what you owe them. Most servicers will accept a request to short sell the home but will reserve the right to finalize the agreement until a signed purchase agreement has been submitted.
    [Show full text]
  • CMS Conventional Underwriting Guidelines – FNMA
    CMS Conventional Guidelines—FNMA CMS Conventional Guidelines—FNMA Mortgage Lending Department Version 3.8 – 07/15/21 DOCUMENT OVERVIEW Purpose The following document describes the responsibilities and requirements of the Carrington Mortgage Services, LLC (CMS) Mortgage Lending Division Underwriter (Underwriter) when reviewing and underwriting mortgage loan applications. The purpose of credit and property underwriting is to ensure that each loan meets high quality standards that make the loans acceptable to CMS and Fannie Mae. Table of Eligibility ............................................................................................................. 24 Contents Purpose ....................................................................................................... 24 Loan Application ................................................................................................ 24 Requirements .............................................................................................. 24 Requirements for the Loan Application Package ........................................ 25 Document Images ....................................................................................... 25 Limited Denial of Participation (LDP)/General Services Administration (GSA) Lists .......................................................................................................................... 25 Requirements .............................................................................................. 25 Preliminary Review of Borrower’s
    [Show full text]
  • Bond Issuance Process Overview
    BOND ISSUANCE PROCESS OVERVIEW Adams 12 Five Star Schools November 2016 AND CONFIDENTIAL STRICTLY PRIVATE STRICTLY CONFIDENTIAL This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s affiliates, the “Client”) in order to assist the Client in evaluating, on a preliminary basis, the feasibility of possible transactions referenced herein. The materials have been provided to the Client for informational purposes only and may not be relied upon by the Client in evaluating the merits of pursuing transactions described herein. No assurance can be given that any transaction mentioned herein could in fact be executed. Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. Any financial products discussed may fluctuate in price or value. This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. J.P. Morgan's presentation is delivered to you for the purpose of being engaged as an underwriter, not as an advisor, (including, without limitation, a Municipal Advisor (as such term is defined in Section 975(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act)) . The role of an underwriter and its relationship to an issuer of debt is not equivalent to the role of an independent financial advisor.
    [Show full text]
  • Frequently Asked Questions About Initial Public Offerings
    FREQUENTLY ASKED QUESTIONS ABOUT INITIAL PUBLIC OFFERINGS Initial public offerings (“IPOs”) are complex, time-consuming and implicate many different areas of the law and market practices. The following FAQs address important issues but are not likely to answer all of your questions. • Public companies have greater visibility. The media understanding IPOS has greater economic incentive to cover a public company than a private company because of the number of investors seeking information about their What is an IPO? investment. An “IPO” is the initial public offering by a company • Going public allows a company’s employees to of its securities, most often its common stock. In the share in its growth and success through stock united States, these offerings are generally registered options and other equity-based compensation under the Securities Act of 1933, as amended (the structures that benefit from a more liquid stock with “Securities Act”), and the shares are often but not an independently determined fair market value. A always listed on a national securities exchange such public company may also use its equity to attract as the new York Stock exchange (the “nYSe”), the and retain management and key personnel. nYSe American LLC or one of the nasdaq markets (“nasdaq” and, collectively, the “exchanges”). The What are disadvantages of going public? process of “going public” is complex and expensive. • The IPO process is expensive. The legal, accounting upon the completion of an IPO, a company becomes and printing costs are significant and these costs a “public company,” subject to all of the regulations will have to be paid regardless of whether an IPO is applicable to public companies, including those of successful.
    [Show full text]
  • The Role of Equity Underwriting Relationships in Mergers and Acquisitions*
    The Role of Equity Underwriting Relationships in Mergers and Acquisitions* Hsuan-Chi Chen Anderson School of Management, University of New Mexico Albuquerque, NM 87131, USA E-mail: [email protected] Keng-Yu Ho Department of Finance, National Taiwan University Taipei City 106, Taiwan E-mail: [email protected] Pei-Shih Weng Department of Finance, National Sun Yat-sen University Kaohsiung City 804, Taiwan E-mail: [email protected] Chia-Wei Yeh Department of Banking and Finance, National Chi Nan University Nantou County 545, Taiwan E-mail: [email protected] This draft: September 17, 2020 * This paper has benefited from comments and suggestions from Sevinc Cukurova, Ying-Chou Lin, and Hilmi Songur. We thank seminar and conference participants at National Central University and the meetings of Desert Finance Festival, Eastern Finance Association, and Financial Management Association for their helpful comments and suggestions. Hsuan-Chi Chen gratefully acknowledges support from Anderson School of Management at the University of New Mexico. Address for correspondence: Hsuan-Chi Chen, Anderson School of Management, University of New Mexico, Albuquerque, NM 87131, USA. E-mail: [email protected] 1 The Role of Equity Underwriting Relationships in Mergers and Acquisitions Abstract We examine the role of equity underwriting relationships in subsequent mergers and acquisitions (M&As). Firms, either the bidders or targets, tend to choose their M&A advisors with prior equity underwriting relationships. Consistent with the cost-saving hypothesis, retaining their prior underwriters as future advisors is related to cost reduction in the M&A advisory. Firms also experience shorter deal duration if they hire relationship advisors.
    [Show full text]
  • •Central Securities Depository •Creating Stock •Corporate Actions •Clearance and Settlement •Fixed Income Issues •M
    ® LIFE CYCLE OF A SECURITY explores the role of central securities depositories in the United States and global capital markets, with a particular focus on the part The Depository Trust Company (DTC) plays in launching new securities issues and providing the essential services that security issuers require. The guide explains the process of creating and dis tributing stocks and bonds in the primary and secondary markets,- the details of clearing and settling retail and institutional transac tions, and the sophisticated infrastructure that enables the seamless- payment of dividends and interest, smooth management of tender offers and other corporate actions, and essential risk protection in an increasingly global environment. LIFE CYCLE OF A SECU RITY LIFE CYCLE OF A SECU RITY If trading volume between countries WHAT’S AN justifies it, CSDs are frequently linked INTERNATIONAL CSD? Central Securities Depositories electronically, and have accounts with There are currently two International The certificate stops here. each other, so that securities can be Central Securities Depositories (ICSDs), both moved electronically between them. In located in Europe: Clearstream Banking in most cases, payment for those securities Luxembourg and Euroclear Bank in Belgium. In the quest to attract capital and make shares that an issuing corporation offers is usually handled between the trading Initially created to accommodate the their economies more vibrant, most for sale in one or more countries in addi- firms’ settlement banks rather than expanding market in Eurobonds—bonds countries with active capital markets tion to its home market. This approach through the CSD, though some CSDs issued in a different currency and sold in have central securities depositories allows the corporation, working with a are equipped to handle both transfer a different country than that of the issuer, (CSDs) to provide the custody and local depositary bank, to raise capital in and payment.
    [Show full text]