MortgageBacked Securities
Mortgage-backed securities (MBS) are a type of investment instrument that represents an ownership interest in a pool of mortgage loans. These securities are created when a financial institution, such as a bank or mortgage company, bundles together mortgages and sells them to a government agency like Ginnie Mae, or a government-sponsored enterprise like Fannie Mae or Freddie Mac. The agency or enterprise then divides the pool of mortgages into shares, which are sold to investors as MBS. MBS fit into the hierarchy of Real Estate, Real Estate Financing, and Real Estate Equity Finance by providing a way for real estate financing to be packaged and sold to investors as an investment vehicle. By doing so, it allows for the flow of capital from the investors to the mortgage borrowers, which helps to finance the purchase of real estate properties. This in turn contributes to the overall health and growth of the real estate market.