Who decides what, and who holds the money
Credit approval is held apart from origination. The party that directs investment never holds the funds.
Four roles, four parties
The programme is built so that no single party can originate a loan, approve it, hold the money and hold the security.
That separation is the first control, and it is structural. It does not rely on any party choosing to act properly, because no party is in a position to act improperly on its own.
Manager
Auremont directs investment under the Investment Policy, applies the credit standard to every loan, and instructs the Appointed Trustee.
Appointed Trustee
Holds the property of the Master Trust and of every Series Sub-Trust, and issues the instruments as principal.
Approved Financier
Originates at the asset level, introduces and services the loan, and commits its own capital to the first loss position in that loan.
Security Trustee
Holds the registered first mortgage and the other security for each Single Asset Trust, and enforces on default.
Investment and Credit
Two committees sit over the programme and they do different work.
The Credit Committee decides whether a particular loan is worth writing. It tests the borrower, the asset, the security position and the exit, against one written standard applied the same way to every loan.
The Investment Committee decides how the loan book is shaped. Concentration by state, by asset class and by Approved Financier, the pace of origination, and whether the portfolio as a whole still sits where it should.
The distinction matters because a loan book can be made up entirely of sound loans and still be badly constructed. Keeping the two decisions in different rooms is what stops a run of individually defensible approvals from quietly building a concentrated book.
The members of both committees are set out at Leadership.
Disclosed, not buried
Auremont maintains a conflicts register. It is kept current, it records each conflict and the controls applied to it, and it is available to investors.
Two matters are disclosed here because they are structural and will not change.
The first. Stone Leaf Capital Securities and GRM Law share a principal. Stone Leaf holds the licence and acts as trustee, security trustee, administrator and registry. GRM Law acts as solicitors. The two firms are separately constituted and separately engaged, they are required to act independently of one another in their respective roles, and they coordinate only where the programme requires it. The relationship is recorded in the conflicts register and is disclosed in the Information Memorandum.
The second. Stone Leaf holds several roles in the programme at once. That is common in structures of this kind and it is efficient, but it means the trustee, the security trustee, the administrator and the registry are not independent of each other. Investors should understand that and weigh it.
The view behind both. A conflict disclosed and controlled is manageable. A conflict left unstated is not. That is why both appear on a public page rather than in a schedule at the back of a document.
Three written documents
The programme operates to an Investment Policy, a Credit Risk Manual and a Credit Assessment Template.
They set the lending parameters, the assessment method and the record that must exist for every loan before it is approved. They are settled with the Licensee and are provided to investors with the Information Memorandum.