 a mortgage-backed security (mbs) is a type of asset-backed security that is secured by a mortgage, or more commonly a collection ("pool") of sometimes hundreds of mortgages. the mortgages are sold to a group of individuals (a government agency or investment bank) that "securitizes", or packages, the loans together into a security that can be sold to investors. the mortgages of an mbs may be residential or commercial, depending on whether it is an agency mbs or a non-agency mbs; in the united states they may be issued by structures set up by government-sponsored enterprises like fannie mae or freddie mac, or they can be "private-label", issued by structures set up by investment banks. the structure of the mbs may be known as "pass-through", where the interest and principal payments from the borrower or homebuyer pass through it to the mbs holder, or it may be more complex, made up of a pool of other mbss. other types of mbs include collateralized mortgage obligations (cmos, often structured as real estate mortgage investment conduits) and collateralized debt obligations (cdos).lemke, lins and picard, mortgage-backed securities, chapters 4 and 5 (thomson west, 2013 ed.). the shares of subprime mbss issued by various structures, such as cmos, are not identical but rather issued as tranches (french for "slices"), each with a different level of priority in the debt repayment stream, giving them different levels of risk and reward. tranchesâespecially the lower-priority, higher-interest tranchesâof an mbs are/were often further repackaged and resold as collaterized debt obligations.how can mortgage-backed securities bring down the u.s. economy?| josh clark| how stuff works these subprime mbss issued by investment banks were a major issue in the subprime mortgage crisis of 2006â8. the total face value of an mbs decreases over time, because like mortgages, and unlike bonds, and most other fixed-income securities, the principal in an mbs is not paid back as a single payment to the bond holder at maturity but rather is paid along with the interest in each periodic payment (monthly, quarterly, etc.). this decrease in face value is measured by the mbs's "factor", the percentage of the original "face" that remains to be repaid. ==securitization== thumb|350px|right|value of mortgage-backed security issuances in $usd trillions, 1990-2009. (source: [http://www.sifma.org/research/statistics.aspx sifma statistics, structured finance]) the process of securitization is complicated and depends greatly on the jurisdiction within which the process is conducted. among other things, securitization distribut
Fixed_income_securities Mortgage-backed_security Structured_finance United_States_housing_bubble