How often do banks today hold loans that they make, for example, home mortgage loans under the traditional "originate to hold" model of banking? a. Never, because it is not legal to do sob. Always, because the law required itc. Not often, because banks prefer to sell off the loansd. Most of the time.

Question

Carl Nolan

Business

8 April, 16:19

How often do banks today hold loans that they make, for example, home mortgage loans under the traditional "originate to hold" model of banking? a. Never, because it is not legal to do sob. Always, because the law required itc. Not often, because banks prefer to sell off the loansd. Most of the time.

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Answers (1)

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Douglas Boyer · Answer 1

The correct answer is letter "C": Not often, because banks prefer to sell off the loans.

Explanation:

The "originate to hold" banking model implies lenders requesting loans with the intention of holding them until maturity. Nowadays this practice is not regularly used since financial institutions opted for the "originate to distribute" model where the loan requester is given a credit to sell it to other parties or to securitize part of it for future purposes.