Today when a new home owner or business goes to a bank looking for a loan for real estate, it is very unlikely that the mortgage will stay with the originating issuer. Mortgage backed securities or MBSs are a bond instrument secured by a collection of underlying mortgages. The mortgages are pooled together through a process called securitization. Securitization is a process where assets producing cash flows are combined and made into securities with their principal and interest payments being insured or guaranteed.
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