Mortgage-Backed Security (MBS)

Definition - What does Mortgage-Backed Security (MBS) mean?

Mortgage-backed security (MBS) refers to securities that are backed up by a number of mortgage loans. It can also be defined as a security backed by an asset. Rather than paying the investors principal and fixed coupons, it pays out cash from mortgages.

Justipedia explains Mortgage-Backed Security (MBS)

Mortgage pass-through is the simplest form of mortgage-backed security. In pass-through, all the interest and principal payments are made to the investor from a pool of mortgages each month. This is also known as mortgage-related securities. These securities are commonly seen in real estate financial transactions.

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