What Are Mortgage Backed Securities?

Investors buy mortgage-backed securities to receive monthly earnings from the repayments made on these loans. An MBS is a kind of financial instrument, particularly an asset-backed safety. One answer is that, with the introduction of MBSs, lenders not assumed the chance of a mortgage default. They simply issued the loan and promptly bought it to others who finally took the chance if payments stopped. And since MBSs created early on were primarily based on mortgages granted to the extra reliable prime debtors, the securities carried out well.

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