Mortgage-Backed Security (MBS)
Also called: MBS, mortgage backed securities, agency MBS
An MBS pools mortgages and sells claims on their payments to investors, which is what lets a lender originate a loan and immediately recycle the capital. Agency MBS carry government-linked credit backing; private-label ones don't, and that distinction is much of 2008. Their defining oddity is prepayment risk: borrowers refinance when rates fall, returning your capital exactly when reinvestment is worst.