Abstract
Mortgage-backed securities are financial instruments secured by portfolios of commercial or residential mortgages. It is estimated that there are $8.9 trillion in mortgage-backed securities outstanding, accounting for about 25 percent of the total amount of the public and private debt market. The issuers of these securities are typically special-purpose entities whose sole asset is a portfolio of mortgage securities. The special-purpose entity collects the cash flow from these mortgages and redistributes it to the holders of the mortgage-backed securities according to the terms of their investments.
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