What Is a Mortgage-Backed Security (MBS)?
Updated 24 days ago (March 6, 2026)
An MBS is a type of security that is guaranteed by a mortgage or a collection of mortgages, and is issued by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.
Lenders first identify and bundle a group of mortgage loans issued by banks, and then propose this bundle of mortgages as an MBS to a government-sponsored enterprise that has the authority to issue and guarantee MBS. Such government-sponsored enterprises include Ginnie Mae, Fannie Mae, and Freddie Mac. These entities may issue and guarantee the MBS.
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MBS can have multiple investors. Depending on the minimum investment required for the MBS, multiple investors could each invest in a single MBS product through different issuers.
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