This is a two part question:
1) I understand that there are certain mortgage loans that when originated by banks can be gathered up into pools and then "sold" to investors, and that these pools are backed by Ginnie Mae, in the sense that, if the borrowers are unable to make payments, and the banks that originated them are also unable to make payments, then Ginnie Mae would step in and make the payments.
My first question is about the banks. What incentive do they have to gather up the loans in pools and sell them to investors? Because the payments made are not ending up in their pockets, but that of the investors instead.
2) Secondly, I've read that, in this process, Ginnie Mae collects a fee (of a max of six basis points). Who is this "fee" levied upon?
I hope my questions aren't too naive and simple to understand. Thanks!