Series 50: Mortgage-Backed Securities

Mortgage-Backed Securities

A mortgage-backed security (MBS) is a securitized bond backed by the mortgage payments of a pool of mortgages. In the U.S. these are usually set apart from other asset-backed securities and considered separately. However, every asset has unique characteristics that make its securitization distinct. From an investor’s perspective, an MBS is similar to any other kind of bond, except instead of receiving a fixed coupon payment, the investor receives monthly interest payments that vary depending on how quickly homeowners pay off their mortgages. That is, an investor who purchase