Question

Could you please describe to me the process of securitization of mortgage loan?

Answer 1

Ans.1. Securitisation: Securitisation is a process in which financial assets are converted into securities.

I would like to explain the process of securitisation of mortgage loan :

1. Initials lending: Financial institutions gives various loan to different borrowers. Then borrowers have to repay the loan with interest rate.

2.Securitisation: Financial assets are transfered and borrowers pays the cash to the financial institutions for taking over the financial assets.

3.Financing: The borrowers finance the assets transfered to it by issue of securities like pass through certificates (PTCs) and debt securities to investers. These are generally sold to investers through merchant bankers.