Clear title refers to the legal ownership of an asset. If an asset has clear title, there are no outstanding debts or liens against it. This means that the asset can be freely transferred to another party without any problems.
Clear title is important in securitisation because it ensures that the investors in a securitisation have a valid claim to the underlying assets. If an asset does not have clear title, the investors may not be able to recover their investment if the borrower defaults on their loan.
Here are some examples of clear-title in securitisation:
- A car loan securitisation would require the underlying cars to have clear title. This means that there would be no outstanding loans or liens against the cars.
- A mortgage-backed security (MBS) would require the underlying mortgages to have clear title. This means that there would be no outstanding debts or liens against the properties that are being mortgaged.