Key Differences US vs Europe

Although the underlying characteristics are similar across the two regions, fundamental differences exist in the two markets.

U.S. Market

  • Government-sponsored entities create a liquid securitization market:
  • Credit risk sold
  • Need not be self-funded
  • Standardized product
  • Virtually no prepayment penalties
  • Results in high refinance market
  • Capital requirements low

European Market

  • Limited secondary market, assets retained
  • Credit risk retained
  • Funded through bond issuances
  • Prepayment penalties
  • Limits refinance market and origination volume
  • Capital requirements high

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