| Mortgage
Backed Securities - MBS |
 |
An
investment instrument that represents ownership of an undivided interest
in a group of mortgages. Principal and interest from the individual
mortgages are used to pay principal and interest on the MBS.
|
 |
Essentially
when you invest in a mortgage backed security you are lending money
to a home buyer or business. MBS are a way for smaller regional banks
to lend mortgages to their customers without having to worry if they
have the assets to cover the loan. Instead they act as a middleman
between the home buyer and the investment markets. |
|
|
|
|
Dictionary
