The securitization process allows smaller loans to be sold since they are repackaged into larger loans. Often the mortgage is sold but the loan originator continues to serve the loan. The valuation of mortgages is similar to the valuation of any fixed income asset. The market value is based on the present value of the cash-flows. Predicting the timing is not as easy as it would appear.
Borrowers have a prepayment option.
This is exercised if rates fall or if the borrower sells property. The mortgages are sold while the serving of the loan stays with the originator. A trustee holds the mortgages but the loans are serviced by the lender. Interest payments are generally made on a monthly basis. CMOs are a good example of financial engineering.