Investor Glossary - Mortgage-backed SecurityInsightful stock market charts - Click here

 # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z     

Mortgage-backed Security


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.


               


Is the stock market headed lower? The answer may surprise you.
Find out now with the exclusive & highly regarded charts of Chart of the Day.


 Popular Terms : deferred revenue, 401a, forward PE, minority interest, deferred tax, retained earnings, 144a, average price per share, trailing PE, real GDP, FICO score, diluted share, wholly-owned subsidiary, net book value, cancelled check, debt service coverage, 1031 exchange, LIBOR, liquidity ratio, arm's length transaction, option premium, inflation, EBITDA, commodity, per diem, reverse mortgage, balance sheet, 1035 exchange, Zero Cost Collar, phantom income, assets under management, margin rate, required rate of return, covered put, current ratio, Key Rate Duration, APR, class C shares, quant, Russell 3000, stock, asset/equity ratio, CUSIP, Black Friday, annualize




 Rate the mortgage-backed security definition... Receive our free Term of the Day email.
 Your Rating:
 Poor 1 2 3 4 5  Excellent
Simply type in your email address and click submit:
 Comment:   
 


Subscribe   Unsubscribe
Home | Term of the Day | Tell a Friend | Suggest a Term | Edit Subscriber Detail
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2008 Investor Glossary - All rights reserved