Mortgage-Backed Securities (MBS)
Mortgage-Backed Securities (MBS) are financial instruments created by pooling together multiple home loans. When banks issue mortgages, they can bundle these loans and sell them as a single investment to investors. These investors receive payments that come from the homeowners' monthly mortgage payments. MBS allows lenders to free up capital to issue more loans while giving investors opportunities to earn returns from the real estate market. Essentially, it's a way for investors to invest in mortgages without having to directly manage the loans themselves.
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Mortgage-Backed Securities (MBS) are financial products created by pooling together multiple home loans. Banks or financial institutions bundle these mortgages and sell them as shares to investors. When homeowners make their mortgage payments, the money flows to the investors, providing them with regular income. MBS can offer attractive returns, but they also carry risks, especially if many borrowers default on their loans. Essentially, MBS allows investors to indirectly invest in real estate mortgages while providing banks with capital to issue more loans.