Mortgage-backed securitization is an essential part
of the mortgage secondary market, as it provides both liquidity and expanded
sources of funding for real estate lender. Securitization also allows for more
widespread participation in the real estate market, since MBS bonds are an
asset class that can be held by classes of investors that are restricted by law
from retaining extended ownership in real property. More participation in the
real estate secondary market, of course, translates to a more robust market
with more available real estate funding and more real estate activity.
Despite its role in the market down-turn of
2007/2008, securitization of real estate assets has been and continues to be an
important part of the U.S. real estate finance market. Securitization, however,
heavily depends on a bankruptcy remote structure.