Mortgage Backed Securities Attorney In Birmingham
A mortgage backed security (MBS) is a type of asset-backed security that is secured by a mortgage or collection of mortgages. The mortgages are sold to a group of individuals (a government agency or investment bank) that secures, or packages, the loans together into a security that investors can buy.
Ifediba Law Group, P.C. has proven experience in Mortgage-Backed Securities claims. Send us a message, or Call (866) 933-1515 today for a free consultation regarding Mortgage Backed Securities.
Mortgage Backed Securities (MBS)
What Are They?
- Financial instruments backed by mortgage loans.
How They Work:
- Home mortgages are pooled together and sold to investors.
Types:
- Pass-through: Investors get a share of the monthly payments from homeowners.
- CMOs: Complex version with different risk/return profiles.
Benefits:
- Banks free up capital.
- Investors gain income and portfolio diversification.
- Boosts housing market liquidity.
- Risks:
Interest Rate:
- MBS value can drop if rates rise
Prepayment
- Homeowners might refinance, changing return rates.
Credit
- Homeowners could default; this is mitigated with some government-backed MBS.
Note: Investors should understand the inherent risks before diving into MBS.
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