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Introduce Poppy playtime coloring pages chapter 3
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Okay, so imagine a bunch of mortgages – like, a whole collection of home loans – all bundled together. That's essentially what an MBS is. Think of it as a pool of mortgages that have been packaged and then sold as a single security to investors. When someone takes out a mortgage to buy a house, they're typically borrowing money from a bank or other lender. That lender then sells these mortgages to a company, which groups them into a pool. These pools of mortgages are then turned into MBS. Investors then buy these securities, and in return, they receive a portion of the monthly mortgage payments made by the homeowners. These payments include both principal and interest. The whole process is kind of like a financial remix, where individual home loans become part of a larger, investable product.