This the process involved.
Dec 17 2013 12:20 PM
John goes to his local Wells Fargo bank to get a home loan for $1 million. The bank approves his credit and gives him the loan. Similarly Wells Fargo provides such loans to 1000's of families. Wells Fargo will categorize these loans based on the families risk profiles.
Wells Fargo will then sell these loans to investment banks such as goldman sachs, credit suisse etc. These investment banks will further sub divide these loans into asset pools and issue ownership units in these asset pools. So individual investors can buy 1 or 2 shares in these CMO / CLO's.