Securitization is the process of taking an illiquid asset or group of assets and transforming it/them into a security. Securitization is a method of financing assets wherein, rather than selling the assets as a whole, the assets are combined into a poll, and that pool is split into shares. These shares are sold to investors who share the risk and reward of the performance of these assets. Securitization basically transforms raw assets into tradable units. Some illustrations of securitized products include home mortgages, credit card receivables, auto loans, home loans, student loans, and equipment leases.

Leave a Reply