Mortgage-Backed Securities

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Cameron Fusco
Cameron Fusco's picture
Mortgage-Backed Securities

how does the whole bond that is backed by a mortgage works? could i lose my house?

Jason Pride
Jason Pride's picture

Hi Cameron,

A mortgage backed bond is one that is issued by the bank or other institution that holds many mortgages. They use the security of these mortgage payments in order to issue bonds and generate cash now against the future cash flows of those mortgages.

You cannot issue a bond yourself against your house. You can only take a loan/mortgage against it.