What is a MORTGAGE BACKED SECURITY (MBS)? (Straight to the Point) скачать в хорошем качестве

What is a MORTGAGE BACKED SECURITY (MBS)? (Straight to the Point)

In around two minutes you will know what is a Mortgage Backed Security. You will get both professional definition and easy explanation. No intro, no outro, straight to the point. ► Get FREE stocks up to $4500 with Wealthsimple: https://bit.ly/3kzztaD ► My 263 Companies Watchlist: https://bit.ly/3cbWL3f ► The Best Books about Investing: https://www.amazon.ca/shop/artemdikarev ► Get $25 from Newton (Canada): https://web.newton.co/r/BP8LC6 ► Get $20 from BitBuy (Canada): http://go.bitbuy.tech/SH1G ► Get $10 in Bitcoin from BlockFi: https://blockfi.com/?ref=ebccda0d ► Get $10 from Coinbase: https://www.coinbase.com/join/dikare_1 ► Follow Me On Instagram:   / artemdkrv   Mortgage Backed Security, or an MBS, is a financial instrument which bundles several individual mortgages. And if you are not sure what mortgage means, feel free to watch one of my previous videos. And here is an example. Imagine a bank has $1 billion worth of mortgages to give out. And let’s say theoretically, the average mortgage is $500,000. Which means that this bank can give out 2000 mortgages before running out of money. Instead, this bank can sell these individual mortgages on the secondary market to, for example, Fannie Mae or Freddie Mac. And they in return will do so called “securitization” for these mortgages. Which in very basic understanding means packing several individual mortgages into a single mortgage backed security. And these mortgage backed securities are a collection of, for example, 100 different mortgages sorted by their safety rating. As a result, 2000 mortgages were packed inside 20 mortgage backed securities. And ideally, every single one of them contains mortgages with the same safety rating. Low safety rating means that borrowers have higher chances of default. And because of this, the interest payments are higher to offset these risks. Later, Fannie Mae or Freddie Mac can sell these mortgage backed securities on the secondary market to other institutional investors. As a result, institutional investors are the final owners of mortgage backed securities, and they receive interest payments. In this case, MBS is almost like a bond. If you find my content interesting, please consider subscribing to my channel. It helps a lot as a beginner creator. And let me know if there is anything you would like to know about personal finances and investing. *None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.