An instrument of financial value; stocks and bonds are securities.
A Mortgage Backed Security
Is where a bunch of mortgage loans are grouped together to create a large pool of debt. this debt is then sold to investors the same way a bond is; you buy it at a discount and rely on the mortgage payments for the payout. Because some of these mortgages were structured so that people ended up paying MORE than they were borrowing, it sounded like a great deal.
Corporate and institutional investors and investment banks like Bear Stearns bought mortgage-backed securities in droves during the height of the real estate boom, often touting them as “undiscovered gems”.
- Schaeffers’s Investment Research
What does this mean to me? BANKS BAILOUT SUBPRIME RISK
The FDIC has identified over 100 banks as "problem institutions" that where at risk of failure for the first quarter of 2008. That number will go up but historically, only about 13 percent of banks on the list typically fail, says the FDIC. The FDIC doesn’t name the banks specifically for fear customers will rapidly pull their money out.