   
|
|
Mortgage-backed Security
|
| FYI - For 2011, Dow up, Dogs of the Dow up more (double digits) |
| |
A mortgage-backed security (MBS) is a security based upon a pool of underlying mortgage loans. For instance, 500 thirty year fixed rate mortgage loans of $200,000 each can be combined into a $100 million mortgage-backed security issue. The underlying loans are generally insured against non-payment. In the US, Fannie Mae and Freddie Mac are two leading mortgage insurers and creators of mortgage-backed security instruments. Given that each loan in the underlying pool that formed the mortgage-backed security is insured, the primary risk for the mortgage-backed security holder is that of prepayment. The market for mortgage-backed security trading is known as the secondary mortgage market. A special type of mortgage-backed security is the collateralized mortgage obligation, or CMO, which separates the cash flows into different slices called tranches, that are paid at different times to the holders of the various tranches.
Rate this mortgage-backed security definition...
|
|
Where is the market headed? The answer may surprise you. Find out
right now with the exclusive & Barron's recommended charts of Chart of the Day.
|
Popular Terms: inflation, FICO score, EBITDA, labor relations, option premium, 1035 exchange, 144a, deferred revenue, limit order, balance sheet, ex-dividend date, dividends payable, command economy, current ratio, phantom income, required rate of return, average price per share, real GDP, FTSE, stock split, deferred tax, diluted share, margin rate, class C shares, debt service coverage, minority interest, open position, annual return, ex-dividend, 401a, risk management, reverse mortgage, covered put, in escrow, LIBOR, implied volatility, wholly-owned subsidiary, irrevocable trust, quality assurance, stock market close, liquidity ratio, cancelled check, 1031 exchange, APR, Key Rate Duration, Zero Cost Collar, per diem, retained earnings, VIX
|
|
| |