Colorado Code
Part 4 - Uniform Principal and Income Act
§ 15-1-425. Asset-Backed Securities

Source: L. 2000: Entire part R&RE, p. 1144, § 1, effective July 1, 2001.
Scope of section. Typical asset-backed securities include arrangements in which debt obligations such as real estate mortgages, credit card receivables and auto loans are acquired by an investment trust and interests in the trust are sold to investors. The source for payments to an investor is the money received from principal and interest payments on the underlying debt. An asset-backed security includes an "interest only" or a "principal only" security that permits the investor to receive only the interest payments received from the bonds, mortgages or other assets that are the collateral for the asset-backed security, or only the principal payments made on those collateral assets. An asset-backed security also includes a security that permits the investor to participate in either the capital appreciation of an underlying security or in the interest or dividend return from such a security, such as the "Primes" and "Scores" issued by Americus Trust. An asset-backed security does not include an interest in a corporation, partnership, or an investment trust described in the Comment to Section 15-1-412, whose assets consist significantly or entirely of investment assets. Receipts from an instrument that do not come within the scope of this section or any other section of the Act would be allocated entirely to principal under the rule in Section 15-1-403 (1)(d), and the trustee may then consider whether and to what extent to exercise the power to adjust in Section 15-1-404, taking into account the return from the portfolio as whole and other relevant factors.

Structure Colorado Code