The Role of Securitization in Mortgage Lending
Rosen discusses the sources of financing for mortgages. The focus is on the role of securitization in financing mortgages, which includes mortgage-backed securities (MBSs), collateralized debt obligations (CDOs) and structured investment vehicles (SIVs). The process by which most mortgage loans are sold to investors is referred to as securitization. The author first outlines the process by which a mortgage becomes part of an MBS, touching on the role of Ginnie Mae, Fannie Mae, and Freddie Mac (secondary market lenders, described in detail later). The author then explains how MBSs are repackaged into CDOs and SIVs.