The process of bundling loans and selling pieces of the group is known as securitization.

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Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans, or credit card debt obligations and selling their related cash flows to third-party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs). This process allows the original lenders to remove these assets from their balance sheets, thereby freeing up capital and reducing their risk exposure.

The Process of Bundling Loans and Selling Pieces of the Group