The possibility of raising funds by issuing real estate receivables certificates (certificados de recebíveis imobiliários or CRI) was introduced in Brazil in 1997 with the enactment of Law 9,514, which created the Real Estate Finance System (SFI).
Securitization of mortgage-backed receivables was already possible, but Law 9,514 enhanced transparency and efficiency in these transactions.
The SFI establishes the assignment, acquisition and securitization criteria for real estate financing. This system seeks to develop the primary (loans) and secondary (trading of asset-backed securities) markets for financing real estate by creating advantageous compensation conditions and special instruments for the protection of the creditors' rights. One of the main innovations of this system was the establishment of compound interest rates, which were previously forbidden (although the prohibition concerning the application of monetary restatements for periods of less than 12 months was maintained).
Law 9,514 introduced the real estate receivables securitization company, a...