medium · National Real Estate Exam financing
Mortgage-backed securities (MBS) are created when:
- A borrower signs a promissory note and grants a mortgage lien on a single property.
- A secondary market entity pools many mortgages and sells interests in that pool to investors.
- The Federal Reserve Board lowers the discount rate it charges member banks for short-term loans.
- A lender files a judicial foreclosure action in court against one borrower who has defaulted on a single loan.
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