Residential Mortgage-Backed Securities (RMBS)

Residential Mortgage-Backed Securities (RMBS) are financial products created by pooling together numerous residential mortgages. When homeowners borrow money to buy homes, their mortgage payments are collected. These payments are then packaged into a security that investors can buy. Essentially, when you invest in RMBS, you're investing in a share of these mortgage payments. Investors receive returns based on the homeowners’ mortgage payments. RMBS allow for better liquidity in the housing market and provide investors with a way to earn income, but they also carry risks, as defaults on mortgages can affect returns.