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Securitization of Subprime Home Mortgages in United States
By qwcdirect | July 12, 2010
Securitization, more popularly known as structured finance is the technique of supporting pooling of direct income resources and then reselling them to the investors. The concept of securitization in United States is very widespread and can be used in many contexts such as medical records, lawsuits etc but this term is very frequently used in reference to the subprime home mortgages .In the context of the securitization of the subprime home mortgages the United States has developed a complex relationship among various business houses that offer multiple kind of finance and investment options.
Securitization of home mortgages help to transfer the risk involved to the outside third investor so the banks are able to originate more assets without increasing their capital. The major objective of the securitization of the subprime home mortgages in the United States was to maximize the volume of AAA rated securities created from e given pool of mortgages. This kind of securitization was very crucial for the credit crisis.
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