[Verse 1]
Banks have mortgages piled high on their shelf
But holding loans forever hurts their wealth
So they gather up these debts into a case
Hand them to an SPV, clean slate embrace
The Special Purpose Vehicle takes the wheel
Slices payments into tranches, makes the deal
[Chorus]
Securitization nation, packaging the debt
Senior, mezzanine, equity - different risk you bet
O-S-E-S remember well
Overcollat, Subordination, Excess spread and Surety spell
Credit enhancement, four ways strong
Securitization keeps the money flowing along
[Verse 2]
Mortgage-backed securities come in different shapes
Pass-throughs share payments, no complex escapes
But CMOs get fancy with their sequential flow
PAC tranches get protection, support takes the blow
Prepayment hits like thunder when rates start to fall
CPR and PSA measure the call
[Chorus]
Securitization nation, packaging the debt
Senior, mezzanine, equity - different risk you bet
O-S-E-S remember well
Overcollat, Subordination, Excess spread and Surety spell
Credit enhancement, four ways strong
Securitization keeps the money flowing along
[Bridge]
Credit cards and auto loans, student debt in pools
Asset-backed securities, following the rules
CDOs take it further, cash flow or synthetic play
Covered bonds stay on balance, a different pathway
SMM monthly numbers show the prepayment speed
Each structure serves a purpose, each fills a market need
[Chorus]
Securitization nation, packaging the debt
Senior, mezzanine, equity - different risk you bet
O-S-E-S remember well
Overcollat, Subordination, Excess spread and Surety spell
Credit enhancement, four ways strong
Securitization keeps the money flowing along
[Outro]
From originator to investor hands
Tranches carved like layers in the sand
The SPV transforms the single stream
Into a diversified payment dream