Definition
Securitization consists of grouping a portfolio of mortgage loans into a 'pool' and issuing financial securities backed by these receivables. Lenders thus recover their immobilized capital and can grant new loans.
In Canada, two main channels: 1. **NHA MBS Program**: lenders pool insured mortgages into CMHC-guaranteed NHA MBS, which they keep or sell to investors. 2. **Canada Mortgage Bonds (CMBs)**: CMHC buys the NHA MBS and issues CMBs with federal guarantee — investors benefit from federal risk, lenders obtain low-cost funds.
Historically, the 2008 US crisis revealed the risks of poorly structured securitization (subprimes). The Canadian system is more conservative: only NHA-insured mortgages (higher quality) are securitized via CMHC, with strict prudential supervision.