The securitisation of mortgages is combining different individual mortgages having similar features into a pool and then selling this as a financial instrument which earns interest from the payment of the each individual mortgage. The benefit of securitisation is that it turns the illiquid morgages into liquid assets that can be bought and sold on the secondary market. This allows the financial institutions who issued these mortgages chance to give out more loans as selling the mortgage securities enables them to remove those mortgages from their books of accounts.
* Please don’t forget to hit the thumbs up button, if you find the answer helpful.
Get Answers For Free
Most questions answered within 1 hours.