Simply put securitizing loans into MBS's and selling them to investors for a one time cash payment removes those loan liabilities from the bank's balance sheet (off balance). The objective is to reduce the bank's liabilities and as such reduce it's Capital Ratio requirement (assets/liabilities). If the securitized loans are not sold i'm not sure whether they still have to report them on the balance sheet or it's that the securitization process alone guarantees off-balance treatment. I just don't know for sure.
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