Journal Article

Securitization and community lending: a framework and some lessons from the experience in the U.S. mortgage market

Abstract: This article provides a framework for analyzing the development of securitization as a vehicle for funding community economic development loans. Broadly speaking, there are two models for funding assets: (2) the portfolio lender model, which typically involves banks or other intermediaries originating and holding the loans and funding them mainly with debt, most often deposits; and (2) the securitization model, which involves tapping bond markets for funds, for instance, by pooling loans and selling shares in the pools. The focus here is on broad issues of when securitization is likely to be the more economic form of funding, some specifics of how the funding might be structured, and an analysis of the experience in the U.S. mortgage market.

Keywords: Asset-backed financing; Mortgage loans;

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Community Development Innovation Review

Publication Date: 2006

Issue: 1

Pages: 1-16