Purchase Without Recourse (PWOR)

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What is PWOR

  • A contract whereby Cagamas purchases conventional and Islamic receivables without recourse for default risk
  • Seller gets principal of the receivables up front and receives excess spread as servicer fee upon collection of loan installments

Key Features

  • Outright sale to Cagamas, no recourse for default risk
  • Islamic and conventional housing and hire purchase loan / financing
  • Standardized structure and documentation
  • Pricing from par to premium, depending on quality of assets
  • Cash purchase or settlement by Cagamas bonds
  • Excess spread paid to seller as servicer fee
  • Sellers will be appointed as Servicer for loans sold – customers not affected


  1. Transfer of credit risk
  2. Full capital relief
  3. Management of portfolio concentration risk
  4. Shift to fee based income
  5. Improve Return on Asset / Return on Risk Weighted Capital
  6. Improve earning stability
  7. Sell loans at premium - locking in profits
  8. Stabilizing marketing strategy
    • Avoid curtailment of successful marketing centre or campaign when concentration occurs
    • Avoid temporary exit from market when conditions become challenging
  9. No transaction cost
    • Savings on legal, financial advisors, arrangers, SPV set up costs etc
  10. Fast turnaround time
    • 3 weeks compared to 3 – 9 months for ABS
  11. Flexible transaction size
    • Do not require large transaction size to achieve economies of scale as in the case of ABS