Explore BrainMass

Explore BrainMass

    Financial Crisis and Securitization

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Securitization of mortgages enabled various dimensions of risks embedded in pools of mortgages to be distributed to investors with varying degrees of tolerance for credit and interest rate risk and with differing expectations about the future path of economic valuables. Before securitization, the bank that originated a pool of mortgages tended to be the financier of these loans until the loan was paid off. This meant that all of the risks embedded in the mortgage pool remained on the balance sheets of the originating bank. This was the mainstream financing technique was. True or false and why?

    © BrainMass Inc. brainmass.com March 5, 2021, 12:35 am ad1c9bdddf

    Solution Preview


    The main point of securitization is to get the assets in a group and off the balance sheet of the originator. Remember Enron's collapse in 2001? They used the same principles of securitization. By using Special Purpose Entities, they pooled ...

    Solution Summary

    This solution explains if the mortgage securitization question is true or false and explains why.