President Donald Trump wants the federal government to purchase mortgage-backed securities to help restore housing affordability.
The current administration has proposed a range of ideas to help young families achieve homeownership, including bringing down mortgage rates, and banning large institutional investors from buying residential homes.
Here’s how the president’s latest idea surrounding mortgage bonds would work.
Understanding Mortgage-Backed Securities
A mortgage-backed security (MBS) is a bond comprised of home loans.
Thousands of individual mortgages are pooled into a single investment, and the homeowners’ monthly payments are passed through to the investors who hold it.
The two most common are agency and non-agency mortgage-backed securities….
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