How does securitization fraud impact investor confidence in mortgage-backed securities?
How does securitization fraud impact investor confidence in mortgage-backed securities?
Securitization fraud undermines investor confidence in mortgage-backed securities by casting doubt on the accuracy and reliability of information provided about these financial instruments. When investors perceive a lack of transparency or integrity in the securitization process, they may become hesitant to invest in mortgage-backed securities, leading to decreased demand and liquidity in the market. This loss of confidence can exacerbate market volatility and increase the cost of capital for mortgage lenders, ultimately impairing the efficiency and stability of the financial system.