A mortgage-backed security is a variety of asset-backed security an investment in a collection of loans for which the lender holds a mortgage over the property the loan was used to purchase. The loans are written by a financial institution, then sold to an intermediary, who packages (or securitizes) the loans into different groups, based on their level of risk. The packaged group of loans is then offered to investors.
« Back to Glossary IndexMortgage-Backed Security
« Back to Glossary Index