Collateralized Mortgage Line of Credit

Collateralized Mortgage Line of Credit (CML) is a commitment by IFC to lend funds against a pledge of mortgage assets held as collateral for IFC’s obligation. Typically, the line is structured as a revolving line allowing multiplier effect for mortgage origination. This product is usually used by primary mortgage market originators and can be viable if securitization is not yet available.

How Collateralized Mortgage Line of Credit Works:

(A) IFC provides the CML to an eligible borrower to originate mortgage loans based upon pre-defined criteria.
(B) Borrower pledges a pool of mortgage assets to IFC as collateral of the line of credit.
(C) The mortgage assets are held in a bankruptcy-remote security vehicle which is established for the purpose of establishing security for the line of credit; As permitted by law, all rights (including, but not limited to, collection rights) relating to such underlying mortgages would be held in such for the benefit of IFC.
(D) A reputable financial institution is selected as a trustee.
(E) After appropriate level of seasoning, assets transferred to securitization vehicle to be placed as a mortgage backed security (MBS) in the capital market. This serves as a repayment to the IFC, and can be re-borrowed by the borrower. IFC will continue to have full recourse to the Borrower in the event that cash flows from the underlying assets in such Trust do not cover the debt obligation to IFC.

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