Question by ivette s: What does securitizing an asset mean. Asset securitization? In plain english please. Thanks?

Best answer:

Answer by puremonopoly
Financial cash-flow producing assets that are pooled together and sold to investors in packages. These asset packets don’t hold high yielding returns.

Sub-prime lenders use this technique when issuing a loan. They’ll secure the loan from many lenders that contribute partial amounts of money so as to lower the total risk of each lender, thereby allowing each lender to partially secure loans for more than one party. Its a form of risk management that didn’t do so well in the mortgage industry recently because of bad investment techniques.

Its advised to risk no more than 15% of your total assets in Asset Securitization if you do choose to go down that investment route.

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