Misconceptions of securitization, Financial Management

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There are some misconceptions about securitization:

  • Poor quality originators end up in securitizing their assets.

  • A bank's best mortgages are exported from the balance sheet thereby lowering the quality of a bank's balance sheet.

  • Securitization involves selling the mortgage customer to the pool or SPV.

  • Securitization transfers the total risk.

  • Securitization lowers financing costs.


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