Mortgage-Backed Security (MBS)

Mortgage-Backed Security (MBS): A security backed by a mortgage or group of mortgages that represents a claim to the cash flow from the mortgage or group of mortgages, essentially a loan to a home buyer or business from a shareholder. Typically, the mortgage payments are passed through the shareholders on the way to repayment, meaning shareholders will get regular payments of interest and principal.

Source: Investopedia,,