After that mortgage is originated, that lender may seek to sell the mortgage into the secondary market. And they extend credit to worthy borrowers seeking home ownership. So in the US, mortgage finance is generally conducted by banks, credit unions and other financial institutions. That’s why you’ll often hear mortgage-backed securities as mortgage pass-through securities. And what happens in a mortgage-backed security is that principal and interest is passed through to the investor. Mortgages, for those in the US, are paid on a monthly basis, both principal and interest. Paul Varunok: It’s simply a security that’s backed by mortgage loans, guaranteed to that. Host: Paul, we’re going to talk about impacts from the coronavirus pandemic, including the Federal Reserve’s purchasing of Treasuries and mortgage-backed securities, but let’s start with the basics and first go over what exactly is a mortgage-backed security?
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