I don't understand the process of trading mortgage-backed securities.
When the investment bank collects the pools of mortgages and offers them to investors, how exactly is this done? Do investors simply own those pools of mortgages, or do they own shares which represent those pools of mortgages?
What do those pools of mortgages represent to the investors?
Also, does the investment bank make a profit from the cash flow from the mortgage borrowers?
Read more: Distribution of mortgage-backed securities?
