Which of the following is NOT true about securitization? Review Later Mortgage-backed security is a type of securitization collateralized by a single or collection of mortgages traded on the secondary market. Institutions such as investment banks buy mortgages and package them into mortgage-backed securities which can be sold to individual or institutional investors. In securitization, banks sell individual assets such as a mortgage, loan, or lease to third party investors as security. Banks and other financial institutions use securitization to lower their exposure to risk associated with the default of individual assets