Mortgage Backed Securities

A -backed () is a type of that is backed by a pool of . An is created when a lender, such as a bank or , bundles together a group of and sells them to . The from the is used to pay interest and principal to the who hold the .

are often seen as a relatively safe , as they are backed by and the payments from the underlying . They are also seen as a good way for to earn a steady , as the payments from the are typically reliable and predictable. However, the value of an can be affected by changes in interest rates and the creditworthiness of the borrowers who hold the underlying .

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