Originators

Originators are companies that extend credit to their borrower clients based on their underwriting criteria. The type of credit extended depends on which asset class the Originator is associated with and whether or not their credit products are generic or bespoke.

Originators typically maintain four key pillars in their business:

1. Sourcing - Finding new borrower clients through various means, including brokers, paid advertising and referrals

2. Underwriting - Vetting and onboarding new borrower clients based on specific criteria, typically leveraging publicly available information like credit scores as well as other data points to assess the borrower's creditworthiness and determine appropriate terms

3. Servicing - Ongoing interactions with the borrower to ensure timely receipt of payments, managing inquiries and producing statements and/or other disclosures

4. Collections - Pursuit of delinquent borrowers to maximize recovery through all recourse and protections available under contractual agreements

Some of the above pillars may be outsourced, such as servicing and collections, but underwriting is typically the originator's core value proposition and is nearly always performed in-house.

The role an originator specifically plays in a private securitization is the party that is raising debt capital from investors to fund their origination activities. By contributing their originated assets to an SPV and adhering to all the requirements per the debt instrument's terms, they are able to raise attractive capital that is typically non-recourse to the originator since the assets and the overall structure directly support the debt instrument. The originator is also typically the sole owner of the SPV and is subject to various reporting requirements. Therefore, the SPV is typically the borrower in a private securitization.