A Fannie Mae-issued mortgage-backed security (MBS) represents an undivided beneficial ownership interest in a group or pool of one or more mortgages.

The mortgage-backed security process begins with a mortgage loan. The loan is made by a financial institution or other lender to a borrower to finance or refinance the purchase of a home or other property. These loans are made to borrowers under varying terms (e.g., 15-year, 30-year, fixed-rate, adjustable-rate, etc.); during the life of the loan, the balance is generally amortized, or reduced, until it is paid off. The borrower usually repays the loan in monthly installments that typically include both principal and interest.

Because mortgage loans may take years to pay off, lenders must find ways to replenish their funds in order to make more mortgage loans. To do this, lenders sell groups of mortgages with similar characteristics into the secondary mortgage market to issuers or guarantors of mortgage-backed securities, including Fannie Mae.

We pool loans that generally conform to our standards and convert them into single-class mortgage-backed securities known as Fannie Mae MBS, which we then guarantee as to timely payment of principal and interest.

This section provides access to a wide range of information on mortgage-backed securities, including:

In Basics of Fannie Mae MBS Market & Pools, users can review information on Fannie Mae MBS pool characteristics and documents.

In Basics of Fixed-Rate Fannie Mae MBS, users can review information on fixed-rate Fannie Mae MBS pool characteristics and disclosure documents for fixed-rate issuances.

Basics of Adjustable-Rate (ARM) MBS provides in-depth information about Fannie Mae ARM MBS. A Fannie Mae ARM MBS is backed by a pool of mortgages with adjustable rates.

In the Basics of Fannie Mae Megas section, Megas (i.e., Fannie Mae MBS that have been pooled together) are discussed.

In the Basics of Fannie Mae Grantor Trusts section, users can review information on Fannie Mae Grantor Trust characteristics and documents.

In Basics of REMICs, a type of multiclass mortgage-related security is discussed. REMICs are backed by mortgage loans or by mortgage loans pooled into trusts.

Finally, Basics of SMBS details structure, construction, and classes of stripped mortgage-backed securities (SMBS), which are separate interest-only and principal-only securities.