Residential Mortgage-Backed Security

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Residential Mortgage-Backed Security

A derivative whose value is derived from home equity loans and mortgages on properties where people live. As with all mortgage-backed securities, this entitles the owner to a claim on the principal and interest payments on the particular mortgages underpinning the security. MBS's pay an interest rate that is usually related to the interest rates the homeowners are paying on their mortgages. The equivalent of the coupon on a mortgage backed security is a percentage of the interest and principal paid on the mortgages backing the security. An obvious risk to a residential MBS is the possibility that interest rates on home loans may decline, causing homeowners to refinance their mortgages and deprive the holder of the security from future interest payments.
References in periodicals archive ?
NEW YORK -- Fitch Ratings has affirmed the ratings on two residential mortgage-backed securities (RMBS) transactions where Genworth Mortgage Insurance Corporation is either the sole provider of credit enhancement or partial credit support provider, as follows:
MTMC's portfolio is composed of conforming conventional, Federal Housing Authority/Veterans Administration (FHA/VA) and Alt-A loans, in addition to residential mortgage-backed securities (RMBS), its owned portfolio, and private investors.
Claudia will use her knowledge and experience in European residential mortgage-backed securities and banking to develop PMI's presence in Germany," said Tony Porter, Managing Director and Chief Operating Officer of PMI Europe.
The securities acquired will, among other eligibility requirements, be limited to: securities that are direct obligations of, or that are fully guaranteed as to principal and interest by the Government National Mortgage Association (GNMA), the Federal Home Mortgage Loan Corporation (FHLMC), or the Federal National Mortgage Association (FNMA), (the Agencies); and securities that are issued by any bankruptcy-remote, limited purpose issuer of residential mortgage-backed securities (RMBS) and that are rated 'AAA'.
announced that it had acquired SPS to integrate SPS into its residential mortgage-backed securities businesses; SPS will continue to provide servicing for third parties.

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