A mortgage-backed security (MBS) is a pass-through security so structured that all the payments made by mortgage holders, except for servicing fees, go to the investors who purchase the securities. In the case of residential mortgage, the payments are usually protected against the default risk of mortgagors by a guaranty institution. A class of residential mortgages is pooled and collateralized, on which MBS’s are securitized.
KeywordsInterest Rate Monte Carlo Mortgage Loan Mortgage Rate Interest Rate Model
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