Special Purpose Vehicle

Special Purpose Vehicle — An SPV is typically structured as an LLC or trust whose sole purpose is to own a defined set of assets. In the mortgage note world, SPVs appear most often in securitization, where a lender transfers loans into an SPV before issuing mortgage-backed securities. The legal separation ensures that if the originating lender goes bankrupt, the loan pool inside the SPV is not dragged into the bankruptcy estate — a concept known as "bankruptcy remoteness."

Smaller note investors and fund managers also use SPV-like structures when raising capital for a specific deal or pool purchase. By placing the acquired notes into a dedicated entity, the sponsor keeps those assets ring-fenced from other business liabilities and gives investors clear visibility into the performance of the specific pool their capital funded.