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I'm reading about asset-backed securities and am confused about what actually an "asset" is in that context, and who owns the pool of assets.

On one hand, I've read (ref. book Asset Securitization- Theory and Practice) that the originator or the lender owns the assets (loans generating the cashflow), and that assets and loans are synonymous from the perspective of the lender.

On the other hand, I've also read that the assets are supposed to be the collateral. So for example in case of mortgage-backed security, won't the borrower's house (which is supposed to be the collateral for a loan in the pool) be considered the "asset"? In this case, won't the owner be the borrower instead of the lender.

I'd be grateful if someone could clear this up.

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The first instance is closer to the mark.

In an ABS, the assets are the loans (eg mortgages) which have been transferred from the lender to the instrument. The loans are then legally held by a trustee or depository in favour of the owners of the ABS. The original lender is then off the hook for the loans though likely retains some secondary responsibility for administration, foreclosing and the like.

From the perspective of the borrower, the asset is the house and this is pledged as collateral for the loan but this is a different matter.

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