Securitisations typically utilise a special purpose vehicle (SPV). The SPV buys the illiquid assets (mortgages) from the mortgage lender (the originator) and funds the purchase by issuing securities (bonds) to investors. Repayment of principal and interest on the bonds is directly linked to the repayment of principal and interest on the underlying mortgages.
Once the assets are transferred to the SPV, there is normally no recourse to the originator for repayment of the securities issued by the SPV. On the other hand, the SPV is structured to be 'bankruptcy remote' from the originator, meaning that if the originator becomes insolvent, the assets of the SPV will not be distributed to the creditors of the originator. In order to achieve this, the governing documents of the securitisation restrict the activities of the SPV to those necessary to participate in the securitisation.