A collection period is the time period between when a payment is due from a borrower and when it is actually collected. The collection period can vary depending on the type of asset that is being securitised and the terms of the loan.
For example, the collection period for a mortgage might be 30 days, while the collection period for a credit card might be 60 days. The collection period is important for investors in securitisations, as it affects the amount of income that they will receive.
Here are some examples of collection periods in securitisation:
- A mortgage-backed security (MBS) might have a collection period of 30 days.
- A credit card securitisation might have a collection period of 60 days.
The collection period is an important factor to consider when investing in a securitisation. Investors should carefully review the terms of the securitisation to understand the collection period and how it will affect their income.