Mortgage-Backed Certificate

Security backed by mortgages. Such certificates are issued by the Federal Home Loan Mortgage Corporation, and the Federal National Mortgage Association. Others are guaranteed by the Government National Mortgage Association. Investors receive payments out of the interest and principal on the underlying mortgages. Sometimes banks issue certificates backed by Conventional Mortgages, selling them to large institutional investors. The growth of mortgage-backed certificates and the secondary mortgage market in which they are traded has helped keep mortgage money available for home financing. See also Pass-Through Security.