In one sentence
Pooling loans and issuing securities backed by their cash flows, distributing risk to capital-markets investors.
The longer version
Securitization converts illiquid loans into tradable bonds, spreading risk and freeing lender capital to lend again. CMBS is the commercial real estate version; agency securities are another.
Loans destined for securitization are underwritten and documented to the pool's standards, which shapes their closing files.
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