What Is a Mortgage Pool?

A mortgage pool is a group of mortgages held in trust as collateral for the issuance of a mortgage-backed security. Some mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae are known as "pools" themselves. These are the simplest form of mortgage-backed security. They are also known as "pass-throughs" and trade in the to-be-announced (TBA) 澳洲幸运5开奖号码历史查询:forward market.

Understanding a Mortgage Pool

Mortgage pools are comprised of 澳洲幸运5开奖号码历史查询:mortgage loans that tend to have similar characteristics—for instance, they will usually have close to the same maturity date and interest rate. Once a mortgage lender completes a mortgage transaction, it usually sells the mortgage to another entity, such as Fannie Mae or Freddie Mac. Those entities then package the mortgages together into a mortgage pool, and the mortgage pool then acts as collateral for a 澳洲幸运5开奖号码历史查询:mortgage-backed security.

Mortgage-backed securities are collateralized by a mortgage pool filled with similar mortgages, while a 澳洲幸运5开奖号码ཧ历史查询:collateralized debt obligation (CDO) is collateralized by a pool of loans with varying characteristics. A CDO is a structured financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.

A 澳洲幸运5开奖号码历史查询:collateralized debt obligation is named for the pooled assets—such as mortgages, bonds, and loans—that are essentially debt obligations that serve as collateral for the CDO. However, a pool of mortgages that backs a more complex mortgage-backed security or CDO might consist of mortgages of varying 澳洲幸运5开奖号码历史查询:interest rates and characteristics.

Benefits of a Mortgage Pool Fund

Mortgage pool funds are suitable for investors seeking real estate exposure because they tend to be 澳洲幸运5开奖号码历史查询:low-risk investments since they contain many mortgage loans. Mortgage pool fund loans are secured by real estate and are referred to as hard money because unlike most bank loans (which rely on the borrower's creditworthiness), hard money loans consider the value o♔f the underlying property.

Terms for hard money loans are shorter than most mortgages; they range from a few months to three years, while conventional mortgages have 10- to 30-year terms. Because of their shorter terms, 澳洲幸运5开奖号码历史查询:hard money loans are less susceptible to being afꦆfected by interest rate swings, which means it is a more predictable and reliable cash flow.&n🍰bsp;

As mentioned above, mortgage pool funds vary, where some focus on specific property types, while others focus on general characteristics. These differences can impact risk and return, so it is important to research the different mortgage pools before investing. Things to consider when choosing which mortgage pool fund to invest in include the geographic focus of the portfolio, property type and lien position, 澳洲幸运5开奖号码历史查询:underwriting criteria, 澳洲幸运5开奖号码历史查询:liquidity, and management experience.

The Bottom Line

Mortgage pools contain a collection of mortgage loans with similar characteristics, such as issuance dates and maturity dates. 澳洲幸运5开奖号码历史查询:Mortgage lenders sell newly booked loans to another entity, such as Fannie Mae or Freddie Mac, which package the mortgages together into a mortgage pool. The pool is used as collateral for a mortgage-backed security. Investors purchase mortgage pools to earn a diversified investment return.