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1.3.3.4.3 Documentation

The primary contractual document underlying a securitization transaction is the pooling and servicing agreement (PSA). The PSA establishes the securitization loan trust and the various classes of bondholders. It contains the obligations of the servicer and the various “representations and warranties” of the parties to the transaction. In addition, there are other documents associated with the transaction including one or more mortgage loan purchase agreements, an interim servicing agreement, an underwriting agreement, a warehouse agreement, and an insurance agreement.

If the securities are publicly sold, then the pooling and servicing agreement will be publicly available.48 Searching SEC-filed documents requires the name of the actual loan trust in which the consumer’s loan is contained.49

These documents often contain interesting information. They may make representations about the characteristics of the borrowers and of the loan pools. A prospectus may list such information as purported default rates. Courts have found that a PSA can show a joint venture between the originator, securitizer, and servicer.50

Footnotes

  • 48 {48} Each securitization trust, once identified, will have web-accessible SEC forms, often with the above documents attached as exhibits. To locate documentation for a particular securitization, start with an “Edgar” search. Go to the SEC’s homepage at www.sec.gov and click on “Search for company filings” under the section titled “Filings and Forms (EDGAR).” More detail about finding and analyzing documents in this database may be found at Kevin Byers, Researching Subprime Residential Loan Securitizations, The Consumer Advocate vol. 9, no. 1, at 15–20 (Jan./Feb./Mar. 2003) (newsletter of the Nat’l Ass’n of Consumer Advocates). The SEC plans to eventually replace EDGAR with IDEA, which is expected to have greater search capabilities. To use IDEA, click the IDEA link on the SEC’s homepage.

  • 49 {49} The name of the loan trust that actually owns a particular loan can be learned by making a demand to the loan servicer under 15 U.S.C. § 1641(f)(2) or through discovery.

  • 50 {50} See, e.g., Short v. Wells Fargo Bank Minn., 401 F. Supp. 2d 549, 565 (S.D. W. Va. 2005).