Business / Taxes / Securitization: Securitization is the process of pooling various types of debt — mortgages, car loans, or credit card debt, for example — and packaging that debt as bonds, pass-through securities, or collateralized mortgage obligations (CMOs), which are sold to investors. The principal and interest on the debt underlying the security is paid to the investors on a regular basis, though the method varies based on the type of security. Debts backed by mortgages are known as mortgage-backed securities, while those backed by other types of loans are known as asset-backed securities.

Mortgage-Backed Security

Business / Taxes / Mortgage-Backed Security: Mortgage-backed securities are created when the sponsor buys up mortgages from lenders, pools them, and packages them for sale to the public, a process known as securitization. The securities are avai MORE

Jumbo Loan

Business / Finance / Jumbo Loan: Loans of $1 billion or more. Or, loans that exceed the statutory size limit eligible for purchase or securitization by the federal agencies. MORE

Risk Transfer

Business / Finance / Risk Transfer: The shifting of risk through insurance or securitization of debt because of risk aversion. MORE