{"id":1581,"date":"2022-06-06T03:48:49","date_gmt":"2022-06-06T03:48:49","guid":{"rendered":"https:\/\/blog.ark7.com\/?p=1581"},"modified":"2023-05-18T03:43:31","modified_gmt":"2023-05-18T03:43:31","slug":"securitization","status":"publish","type":"post","link":"https:\/\/ark7.com\/blog\/learn\/glossary\/securitization\/","title":{"rendered":"Securitization"},"content":{"rendered":"
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What is securitization?<\/b><\/h2>\n

Taking illiquid assets and transforming them into securities via financial engineering is known as securitization.<\/span><\/p>\n

Real estate securitization is the process of taking bank and other lender-issued mortgages and turning them into securities that investors can buy. Essentially, real estate securitization turns illiquid mortgages into liquid assets by \u201csecuritizing\u201d them. This process is intended to mitigate financial risk while adding liquidity to the housing market.<\/span><\/p>\n

When investors invest in one single property alone, they bear most\u2014if not all\u2014of the risk. Pooled interest in which investors own small parts of various properties diversifies their portfolios and reduces their risk of devastating losses.<\/span><\/p>\n

Securitization has amplified access to capital, allowing investors to have access to investments they otherwise would not have had access to alone. Securitization works to expand capital markets and helps both investors and borrowers.<\/span><\/p>\n

Real estate mortgages are not the only asset that can be securitized. Other examples include:<\/span><\/p>\n