Carty & Company, Inc.

Mortgage Backed Securities

Mortgage-backed securities (MBS or Mortgage Backs) are bonds secured by home and other real estate loans.   Mortgage backs are created when a number of these loans, usually with similar characteristics, are pooled together.  That pool is then sold to a federal government agency like Ginnie Mae or a government sponsored-enterprise (GSE) such as Fannie Mae or Freddie Mac, or to a securities firm to be used as the collateral for the new MBS. The majority of MBSs are issued or guaranteed by an agency of the U.S. government such as Ginnie Mae, or by GSEs, including Fannie Mae and Freddie Mac. MBS carry the guarantee of the issuing organization to pay interest and principal payments on their mortgage-backed securities. While Ginnie Mae’s guarantee is backed by the “full faith and credit” of the U.S. government, those issued by GSEs are not. 

Unlike a traditional fixed-income bond, most mortgage-backed bondholders receive monthly—not semiannual— interest payments benefiting the institution’s cash flow needs.  

Since the creation of GNMA, FHLMC, and FNMA (pronounced Ginnie Mae, Freddie Mac, and Fannie Mae) Carty & Company, Inc. has participated in the mortgage-backed securities market. Many mortgage bankers depend on the financial services industry to make their products available to the secondary market. Our institutional buyers include banks, money managers, trust departments, credit unions, as well as pension funds, and insurance companies. The mortgage-backed securities market is very large and complex with all the major dealers as participants. However, with the expertise and experience of our competent staff, we feel that we offer our customers the best prices and service available in the broker/dealer community.

For more information on the many types of mortgage securities: