mortgage bond(redirected from Mortgage Backed Bonds)
A long-term bond secured by the payments on one or more mortgages. For example, a mortgage corporation may issue a bond backed by payments it receives from clients. This provides the issuer with working capital while providing a relatively safe investment for bondholders. In the event of default, bondholders have the right to take possession of and sell the property underlying the mortgage in order to recover their investments. See also: Mortgage-backed security.