What is an example of securitization of assets?

An example of securitization of assets is the creation of mortgage-backed securities (MBS). In this process, banks bundle together a pool of home mortgages and sell them as a single security to investors. The cash flows generated from the mortgage payments are then passed on to the investors, allowing banks to free up capital for new loans while providing investors with regular income. This practice helps distribute risk and enhances liquidity in financial markets.