Mortgage-backed Securities

Mortgage-backed Securities (MBS) are claims on cash flows that emanate from mortgage loans. This is done through a process called securitization. Basically, mortgage loans are purchased from banks and lenders. They are pooled together in a trust. The trust then sells them as mortgage-backed securities through this process called securitization, which ensures that the cash flow from the mortgage makes its way into the hands of the investors who own the MBS.


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