I enjoyed the discussion. However, a bank does not dispose of a liability when it securitises a bunch of mortgages. A mortgage is an asset of the bank (and a liability of the borrower). By selling a mortgage-backed security, the bank is disposing of one asset and gaining another asset, namely, the cash value of the MBS. I think the motivation for the bank is partly to offload the default risk, and partly to be able to write more loans without breaching the capital adequacy rules.
What if the government buys and owns the land. It would have a growing asset, but the developer could then build without having to fiance the land, so renters pay lower rents? Perhaps even sell the apartments. This should not affect prices for homes that include the land.
I enjoyed the discussion. However, a bank does not dispose of a liability when it securitises a bunch of mortgages. A mortgage is an asset of the bank (and a liability of the borrower). By selling a mortgage-backed security, the bank is disposing of one asset and gaining another asset, namely, the cash value of the MBS. I think the motivation for the bank is partly to offload the default risk, and partly to be able to write more loans without breaching the capital adequacy rules.
Yes. Good pickup. I confused my words there and I think you are right about shedding risk
What if the government buys and owns the land. It would have a growing asset, but the developer could then build without having to fiance the land, so renters pay lower rents? Perhaps even sell the apartments. This should not affect prices for homes that include the land.