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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