PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
need to be notified in order for the assignment to become effective towards them. This Securitisation Law framework endures even after the originator’s insolvency, and the assignment can only be set aside under very exceptional circumstances of fraud and bad- faith activity by the parties, as described in 6.1 Insolvency Laws . Security In many securitisations, the relevant receivables are secured. The relevant security can be of sev - eral types, depending on the deal in question and the underlying assets, with the most com - mon being mortgages, pledges and personal guarantees. In a residential mortgage-backed security (RMBS) or commercial mortgage-backed secu - rity (CMBS) deal, the security will be represented by mortgages over the relevant housing proper - ties or commercial real estate, but in other deals there may be mortgages over other assets (such as cars, ships or aircrafts, seeing as these are subject to registration, as with real estate), or pledges over shares, securities, bank accounts or other forms of security. Security rights, and notably any mortgage or pledge, require perfection steps vis-à-vis third parties, even though the transfer of the security is fully effective between assignor and assignee. However, in most cases, the originator retains the servicing of the assets and the commercial relationship with the borrowers, and therefore the relevant security transfer is not registered immediately (also for cost-related reasons and reasons relating to the ongoing relationship between the originator and its clients, who do not know of the assignment).
The issuer holds the right to implement this reg - istration but, due to the respective costs, the originator roles detailed above and the envis - aged neutrality of the transaction towards the borrowers, the parties rely on the originator’s good faith to avoid having to register immedi - ately, accepting the risk of a bad-faith action by the originator, which could, in theory, assign the same receivables and security to unrelated third parties. In practice, that risk has thus far never materialised, having been accepted by rating agencies and discussed in legal opinions. NPL Securitisations The exception to the above is NPL securitisa - tions, where the originator normally does not retain – and is not willing to retain (also for full deconsolidation purposes) – the servicing of the assets upon the assignment (sale) agreement. In this case, borrowers are notified of the new creditor and respective payee bank account, and registration of the security assignment takes place after the closing date. The above-mentioned exemption of not requir - ing borrower notification of the assignment does not apply to assignments of rights under secured loans that are not being securitised. “True Sales” Under the Securitisation Law, a “true sale” (a non-recourse sale) of financial assets must take place. Legally, this is construed as an assign - ment of receivables, whereby the assignee acquires full legal title over the receivables, not dependent on any condition or term, and where - by the assignor does not guarantee or accept any responsibility for the performance of the assigned receivables. These receivables may already exist (which is typically the case), but the Securitisation Law also allows the assign - ment of future receivables, provided they arise
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