Understanding Securitizer's Loss Rate: A Comprehensive Guide
Definition & Meaning
The securitizer's loss rate refers to the percentage of loans that a securitizer, typically involved in the Small Business Administration's (SBA) 7(a) loan program, has determined to be uncollectible over a specified period. This rate is calculated by taking the total principal amount of 7(a) loans deemed uncollectible by the SBA during the most recent ten years, excluding the current fiscal year, and dividing it by the total original principal amount of all 7(a) loans disbursed by the securitizer in that same timeframe. This metric helps assess the performance and risk associated with the securitizer's loan portfolio.
Legal Use & context
The securitizer's loss rate is primarily relevant in the context of business loans, particularly those backed by the SBA. It is used to evaluate the financial health of lenders participating in SBA programs. Legal professionals may encounter this term when assessing loan securitization, risk management, or compliance with SBA regulations. Users can manage related documentation through platforms like US Legal Forms, which provide templates for loan agreements and other necessary forms.
Real-world examples
Here are a couple of examples of abatement:
For instance, if a securitizer disbursed $1 million in 7(a) loans over ten years and determined $100,000 of those loans to be uncollectible, the securitizer's loss rate would be 10 percent. This indicates that 10 percent of the loans were not repaid.
(Hypothetical example) If another securitizer had $500,000 in loans and identified $50,000 as uncollectible, their loss rate would also be 10 percent, demonstrating similar risk levels despite different loan volumes.