01/02/2014

Mortgage Securities

Mortgage-backed securities (MBS), in English literature MBS (mortgage-backed securities), are special cases of ABS (asset-backed securities). ABS are securities that give their owners the right to receive cash flows from a specific pool (Set) of assets. In the case of MBS assets represent contractual rights to mortgage loans secured by real estate collateral. Mortgage loans are repaid monthly (or quarterly) payments. Owners MBS backed by this pool, get a large portion of these payments on some predetermined pattern.

In world practice, a wide variety of MBS, which differ in the type of ensuring assets, warranties, risk-sharing, etc. However, there are only two fundamental ways to distribute cash proceeds from asset MBS: 1. Payments are sent to owners of MBS after will be made for retaining administrative and servicing MBS. Such papers are called 'cross-cutting'. They constitute the vast majority of emitted MBS in the world. 2. The whole issue of MBS is divided into several classes. Payments, and risks redistributed between these two classes in accordance with a set of rules to structure and service.

Such securities are called structured. Typical examples are structured MBS CMO (collateralized mortgage obligations) and CMBS (Commercial mortgage-backed securities). In Russia, the only statute providing for such tools, today is the Law "On Mortgage Securities 152-FZ of 11 November 2003. The Act provides for securitization of mortgage loans through mortgage-backed bonds and mortgage participation certificates. The most common form of mortgage-backed securities in Russia - a mortgage. The concept of a mortgage as a free traded in the securities market has appeared in federal law in 1998 "On Mortgage".
Jan 2, 2014 1:13:02 AM

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