Respuesta :
Securitization is the practice of pooling mortgages or other types of loans and selling pieces of the pool to investors as bond-like instruments.
What is securitization?
- Securitization is the financial exercise of pooling various types of contracting debt such as residential mortgages, commercial mortgages, auto loans, or credit card debt obligations (or other non-debt assets that generate receivables) and selling their related cash flows to third-party investors as securities known as bonds, pass-through securities, or collateralized loans (CDOs).
- The interest and principal cash flows collected from the underpinning debt and redistributed through the asset base of the new financing are used to repay investors.
- Mortgage-backed securities (MBS) are securities backed by mortgage receivables, whereas asset-backed securities (ABS) are securities backed by other types of receivables (ABS).
Therefore, the practice of bundling mortgages or other types of loans into pools and selling pieces of the pool as bond-like instruments to investors is known as securitization.
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