[tschwimmer]

The banks are likely not holding the loans. They're likely selling the right to the cashflows to an investment firm in exchange for a lump sum of cash more than the value of the loan but less than the total interest collected over the life of the loan. Depending on the composition of the portfolio, various funds may want exposure to the underlying assets and so may be willing to take on the concentrated risk.

While not about these loans specifically, the principles described in [0] apply. Check the section "who buys mortgages?"

[0]https://www.bitsaboutmoney.com/archive/mortgages-are-a-manuf...