The credit risk due to loan default is one of the major risks associated with mortgage loans. New issuers, particularly in emerging economies, have limited historical performance data, making it difficult to predict the probability of default with much confidence. Untested legal procedures (e.g., foreclosure) or lack of default experience make it difficult to forecast loss severity. Originator or third party credit enhancement is used to reduce credit risk of the investor. All forms of wholesale funding involve credit enhancement. Whole loan sales may be participations where the lender and investor share in any loss, or with recourse or seller repurchase requirements. Liquidity facility lending is on an over-collateralized or recourse purchase basis. To attract a wider group of qualified investors, the securitization structures must include highly rated tranches or classes. The amount and type of credit enhancement will be dependent on the desired credit rating (AAA, AA, A, BBB, etc.) for each of the various classes of the security. The basis for the required credit enhancement is the estimated losses for each of the classes under a range of assumptions. The rating agencies will forecast the loss coverage amount as a product of probability of default and loss per default. Credit enhancement is required to ensure that investors receive timely payment of principal and interest from the securities. This form of cash flow insurance differs from loan loss insurance, typically provided by mortgage insurers, which compensates the insured (typically the lender but possibly the investor) for ultimate loss due to a default. Cash flow insurance is required to make the securities more equivalent to bonds (e.g., government, mortgage or corporate) in their cash flow certainty.