Through mortgage-backed securities, banks can remove the risky mortgages from their balance sheets as well as raise some funds from the sale of the pool of mortgages to the special purpose vehicle.

Question

Quizplus · Accepted Answer

Mortgage-backed securities allow banks to sell a pool of mortgages to a special purpose vehicle, which then issues securities backed by these mortgages. This process helps banks remove the risky mortgages from their balance sheets and raise funds by selling these securities to investors.

Through Mortgage-Backed Securities, Banks Can Remove the Risky Mortgages from Their