Securitization is the process of converting financial assets (such as loans or mortgages owed to a bank) into securities [bundles of loans that are grouped together and sold as an investment] that can be traded on the financial markets.
For example, a bank may bundle together a group of mortgages it has made to individual homeowners and create mortgage-backed securities (MBS). These MBS can then be sold to investors, who will receive regular payments based on the interest and principal payments made by the homeowners.
Very Simple Definition:
Securitization is when loans are turned into things that can be bought and sold. For instance, a bank makes a bunch of home loans and makes them into something called mortgage-backed securities [bundles of loans that are grouped together and sold as an investment]. Then, other people can buy those securities and get money from the homeowners who owe the loans.