MBS - Current affairs dictionary

Mortgage Backed Securities (MBS) is a type of asset-backed securities (ABS) issued by mortgage-backed securities, which are mortgage-backed securities issued by a financial institution for 20 or 30-year long maturity mortgages. It is also called 'housing mortgage-backed securities'.

Financial institutions, such as banks, insurance companies, and installment finance companies, will borrow 20-30 years of long-term mortgages from home, and then they will hold mortgage-backed bonds .

Banks and other financial companies sell their mortgage-backed securities to SPCs, SPCs issue MBS products, and MBS products are sold by investors in the capital markets. The money is paid to the financial company by becoming cash.


Financial companies will be able to use their money as a source of lending for home buyers, as they will be able to collect money for a long time to be reimbursed from customers (debtor) at a time.

For example, if a bank lends $ 100 million in mortgages to B, and B repays the principal and interest over a 10-year period, A will issue securities based on mortgage-backed housing and mortgage loans, , Or issue securities through a brokerage firm, sell them to investors, and recover loan funds.

As a result of this securitization process, financial institutions are able to recover their loans early, which means that if a loan is activated and a consumer is planning to set up a house, 20 to 30 percent of the house price will be available for purchase.

MBS is categorized as having a risk weighting of as low as 20% when an international settlement bank calculates its capital adequacy ratio.


■ MBS Securitization Specialty Corporation (SPC) In

Korea, the "Housing Mortgage Securitization Securitization Company Act" was enacted in 1999 to lay the foundations for issuing MBS. MBS Securitization Specialty Corporation (SPC) shall be a company authorized and established under the Mortgage Backed Securitization Corporation Act.

In Korea, KOMOCO (Korea Housing Mortgage Backed Securitization Co., Ltd.) was the largest shareholder in the Korean government, and was established in September 1999 by a combination of domestic and overseas private financial institutions. It issued its first MBS in April 2000.

As the first MBS was issued for the first time in Korea, it was issued in the form of beneficiary certificates as a collateral for the loans held by the National Housing Fund for the purpose of market development. MBS was issued based on the mortgage loans held by private individuals for the first time in January 2002 . Samsung Life Insurance issued mortgage-backed securities (MBS) of 18 billion won based on mortgage-backed securities.

In June 2004, the Korea Housing Finance Corporation (MKIF), a long-term mortgage lending institution, issued MBS with mortgage-backed securities secured through Mogyogilon. MBS is categorized as having a risk weighting of as low as 20% when an international settlement bank calculates its capital adequacy ratio.