Why are mortgages sold?

A mortgage is a loan secured by property, usually a real estate asset. When someone takes out a mortgage, they are borrowing money from a lender and using the property as collateral. If the borrower defaults on the loan, the lender can foreclose on the property and sell it to recoup their losses. Mortgages are often sold by lenders after they have been originated. There are several reasons for this. First, selling the mortgage allows the lender to free up capital so that they can originate more loans. Second, selling the mortgage transfers the risk of default to the new owner of the loan. This is known as “securitizing” the loan, and it allows lenders to make riskier loans without fear of losing money if the borrower defaults. Finally, selling mortgages is simply a business decision for many lenders. They may feel that they can earn more money by investing their capital in other ways, or they may want to get rid of loans that are not performing well. Whatever the reason,selling mortgages is a common practice in the financial world, and it can provide borrowers with access to capital that they might not otherwise have.

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