Whole Loans vs Securitized Loans (MBS, CMBS)
What is a Mortgage-Backed Security (MBS)?
Mortgage-backed securities (MBS) are a major segment of the real estate debt market.
At a high level, an MBS is created when mortgage loans are bundled together and sold to investors. Instead of owning a single loan, investors receive a share of the cash flow (principal and interest) from a pool of loans.
This process is known as securitization.
MBS can be backed by residential or commercial properties. During peak market periods, commercial mortgage-backed securities (CMBS) made up a significant portion of commercial real estate lending.
How MBS Work
- Loans are originated by banks or lenders
- Loans are pooled together
- The pool is converted into securities
- Investors purchase shares and receive payments from the underlying loans
These securities are commonly issued or guaranteed by entities such as:
- Government National Mortgage Association (Ginnie Mae)
- Federal National Mortgage Association (Fannie Mae)
- Federal Home Loan Mortgage Corporation (Freddie Mac)
- Private institutions (private-label securities)
CMBS vs. Single Loan Structures
Most residential loans are bundled into pools and sold as securities.
In commercial real estate, CMBS often involve a single loan or asset split into tranches, with multiple investors participating in that one deal.
These structures are significantly more complex and typically involve:
- Master servicers
- Special servicers
- Structured entities (e.g., REMICs)
Why We Don’t Focus on CMBS
At BankProspector, we do not focus on securitized loans like CMBS.
These are complex financial instruments with:
- Layered ownership structures
- Limited access to decision-makers
- A small group of institutions controlling large volumes of assets
This makes them difficult to penetrate for most investors.
What Are Whole (Portfolio) Loans?
Whole loans—also called portfolio loans—are loans that banks keep on their own balance sheets.
These loans are:
- Not securitized
- Not divided into tranches
- Typically serviced directly by the lender
They sit on the bank’s books and generate interest income.
Whole Loans vs. Securitized Loans
For most investors, whole loans are where the opportunity is.
Compared to securitized loans, they offer:
- Simpler structures
- Direct access to decision-makers
- Greater flexibility in negotiations
- More accessible deal flow
Why This Matters for Your Prospecting
BankProspector is designed to help you identify opportunities with banks and credit unions that hold whole loans and REO.
Your time is best spent targeting:
- Local and regional banks
- Community lenders
- Institutions managing distressed portfolio loans
Next Step
Use Bank Search to identify institutions holding distressed whole loans and begin building direct relationships with decision-makers.
Use Bank Search to identify institutions holding distressed whole loans and begin building direct relationships with decision-makers.