Document Type

Article

Publication Date

2012

Keywords

securitization, mortgage-backed securities, special-purpose entities, SPEs, protection gap, financial crisis, foreclosures

Subject Category

Banking and Finance | Law | Securities Law

Abstract

In this Lecture, Professor Schwarcz examines how complex securitization transactions may have created a “protection gap,” the conundrum that transaction parties may be unable to purchase or might not want to pay the price for full protection. As a result, they sometimes choose or are forced to assume the good faith of the other parties to the transaction and the consistency and completeness of protections provided in the transaction documents.