Mortgage lenders

Securitization allows the banking companies to quickly relend the money to other consumers (including as mortgages) and thereby to produce more loans than the banks could with the total amount they have on deposit. As a result allows the public to use these mortgages to acquire homes, something the government would like to encourage. Investors in conforming loans, meanwhile, gain low-risk income at a higher interest rate (essentially the mortgage rate, without the cuts of the bank and GSE) than they could gain from most other bonds. Securitization has grown rapidly in the last a decade therefore of the wider scattering of technology in the mortgage lending world. To get borrowers with superior credit, government loans and ideal profiles, this securitization will keep rates almost artificially low, since the pools of funds used to create new loans can be refreshed more quickly than in years past, allowing for more rapid output of capital from buyers to borrowers without as many personal business connections as in days gone by.



The increased amount of financing led (among other factors) to the United Claims housing bubble of 2000-2006. The expansion of casually regulated derivative instruments structured on mortgage-backed securities, such as collateralized debt requirements and credit default trades, is widely reported as a major causative factor behind the 2007 subprime mortgage financial crisis. Since a result of the housing bubble, many banking companies, including Fannie Mae, proven tighter lending guidelines which makes it considerably more difficult to obtain a loan