Mortgage-backed securities pages explain what happens to many mortgages after origination and why that hidden market still affects ordinary borrowers. This section is about the secondary mortgage market, loan sales, agency-backed structures, servicing rights, and the institutions that help standardize mainstream mortgage lending.
- Agency Guarantee
Promise supporting timely MBS principal and interest, with materially different federal backing for Ginnie Mae and the Enterprises.
- Agency Mortgage-Backed Security
Mortgage-backed security guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae under distinct U.S. housing-finance frameworks.
- Average Life
Principal-weighted estimate of how long an MBS or mortgage investment remains outstanding under stated payment assumptions.
- Best-Efforts Commitment
Loan-specific secondary-market commitment requiring delivery if the identified mortgage closes and remains eligible.
- Collateral File
Loan document package that supports ownership, enforceability, and delivery of mortgage collateral.
- Collateralized Mortgage Obligation
Structured MBS that redirects mortgage cash flows among tranches with different payment timing and risk characteristics.
- Conditional Prepayment Rate
Annualized mortgage-pool prepayment rate used to compare assumed or observed payoff speeds.
- Credit Enhancement
Structural or contractual support that absorbs or redirects mortgage credit losses before they reach specified security classes.
- Current Coupon in MBS
Theoretical agency MBS coupon estimated to trade near par from current prices of neighboring coupons.
- Dollar Roll
Paired TBA transactions that sell an agency MBS position for one settlement month and buy a similar position for a later month.
- Excess Spread
Residual mortgage interest cash flow remaining after specified security distributions, fees, expenses, and losses.
- Extension Risk
MBS timing risk created when slower prepayments keep mortgage principal outstanding longer than expected.
- Ginnie Mae
Federal government corporation that guarantees timely principal and interest on eligible mortgage-backed securities.
- Guaranty Fee
Fee charged for an Enterprise MBS credit guarantee and reflected indirectly in conforming mortgage pricing.
- Loan Delivery
Post-closing process for submitting an eligible mortgage's data and documents into an investor, agency, or MBS execution.
- Loan Sale
Transfer of a closed mortgage's legal ownership or economic interest to another party.
- Mandatory Commitment
Secondary-market agreement requiring a lender to deliver an eligible product amount by a specified date or resolve the shortfall.
- Master Servicer
Transaction party overseeing specified servicing, remittance, and reporting functions across a securitized mortgage pool.
- MBS Coupon
Stated annual rate used to calculate investor interest on a mortgage-backed security.
- MBS Issuer
Entity or issuing structure that creates MBS backed by accepted mortgage collateral or cash-flow rights.
- MBS Price
Market value quoted for a mortgage-backed security, typically expressed per $100 of principal.
- MBS Trust
Legal vehicle or trust estate holding defined mortgage assets and supporting MBS investor interests.
- MBS Trustee
Party performing limited trust-administration duties assigned by an MBS transaction's governing documents.
- Mortgage Investor
Party holding a whole mortgage or an ownership, beneficial, or economic interest in mortgage cash flows after origination.
- Mortgage Pipeline
Group of mortgage applications, locked loans, or closed loans moving toward funding and investor delivery.
- Mortgage Pool
Group of mortgage loans assembled to support a mortgage-backed security or investor transaction.
- Mortgage Servicing Rights
Contractual rights and obligations to service mortgages and receive the associated servicing compensation.
- Mortgage-Backed Security
An investment security backed by a pool of mortgage loans.
- Non-Agency Mortgage-Backed Security
Mortgage-backed security without a Fannie Mae, Freddie Mac, or Ginnie Mae guaranty.
- Pass-Through Rate
Stated annual security rate used to calculate investor interest after applicable servicing and guaranty deductions.
- Pass-Through Security
Single-class MBS structure distributing investors' pro-rata shares of pooled principal and interest cash flow.
- Pipeline Hedge
Secondary-market position used to offset market-value risk in a lender's expected rate-locked mortgage production.
- Pool Factor
Ratio showing how much of an MBS pool's original principal remains after scheduled payments and prepayments.
- Pooling and Servicing Agreement
Transaction agreement defining how specified mortgage assets are transferred, serviced, administered, and distributed to security holders.
- Prepayment Risk
Risk that mortgage principal returns sooner than assumed, shortening investor cash flow and creating reinvestment risk.
- PSA Prepayment Model
Benchmark that expresses mortgage prepayment speed as a percentage of a standard seasoning-based CPR path.
- Real Estate Mortgage Investment Conduit (REMIC)
Federal tax election for a mortgage securitization vehicle holding qualified mortgages and issuing regular and residual interests.
- Secondary Mortgage Market
The market where closed mortgages are sold, financed, pooled, or securitized after origination.
- Securitization
Process of transferring mortgage assets into an issuing structure that creates securities backed by their cash flow.
- Seller-Servicer
Approved mortgage counterparty that sells loans and services accounts under an investor or agency program.
- Senior-Subordinate Structure
MBS credit structure in which subordinate classes protect senior classes by taking specified losses first.
- Servicing-Released
Loan-sale execution in which the seller transfers rather than retains the mortgage servicing rights.
- Servicing-Retained
Loan-sale execution in which the seller keeps the mortgage servicing rights after transferring the loan asset.
- Single Monthly Mortality
Monthly mortgage-pool prepayment rate used to translate annual CPR assumptions into one-month cash-flow behavior.
- Specified Pool
Identified MBS pool traded or analyzed for known collateral traits rather than only generic TBA terms.
- TBA Pair-Off
Transaction that closes an open TBA or delivery position with an offsetting trade instead of security delivery.
- TBA Settlement
Settlement step in which a to-be-announced agency MBS trade is completed with eligible mortgage pools.
- To-Be-Announced Market
The forward market where many agency MBS trades occur before exact pools are named.
- Tranche
A class within a structured mortgage security with its own payment priority, timing, coupon, or risk profile.
- Weighted Average Coupon
Current-balance-weighted average of the mortgage note rates in a pool.
- Weighted Average Loan Age
Current-balance-weighted age in months of loans remaining in a mortgage pool.
- Weighted Average Maturity
Current-balance-weighted number of scheduled months remaining across loans in a mortgage pool.
- Whole Loan
A complete mortgage-loan asset held or sold directly rather than as an interest in a mortgage-backed security.