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If the originator of the loans that have been securitized buys all Asset backed securities, the...

If the originator of the loans that have been securitized buys all Asset backed securities, the originator bears the credit risk of the loans but gets more liquid assets.

A. True

B. False

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Answer #1

If the originator of the loans that have been securitized buys all Asset backed securities, the originator bears the credit risk of the loans but gets more liquid assets.

This statement is false

If the originator of the loans that have been securitized buys all Asset backed securities, the originator generally transfers the credit risk of the loans to an insurance company after paying insurance premium. After transferring the credit risk of the assets to another institution, the originator eliminates the value of the assets from its balance sheet.

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