Mortgage Backed Security Law and Legal Definition

Mortgage-backed securities or [MSBs] are securities backed by a pool of mortgage loans. It is an asset backed security secured by a mortgage or a collection of mortgages. Instead of paying investors fixed coupons and principal, it pays out the cash flows from the pool of mortgages. The simplest form of mortgage-backed security is a mortgage pass-through in which all principal and interest payments from the pool of mortgages are passed directly to investors each month. Mortgage backed security is also known as mortgage-related security.

Mortgage backed security are commonly used in Real estate related financial transactions. [A.R.S. § 32-3601-16].