Mortgage-backed securities. Bundle mortgages and sell them, freeing the lender's capital to lend again.
It is a financial instrument.
It exists to relieve Borrower may not repay and Lender's capital is locked for decades. That is the whole reason it is here: nothing enters this map without a human problem behind it.
It could not exist without Mortgage, Securitisation law and Ratings agencies. These are the quiet preconditions — remove any one and the solution stops working.
Solving that problem created new ones: Correlated mortgage defaults can take down the system. Follow those and you find the next generation of products built on top of this one.
It competes with Mortgage insurance (PMI) for the same friction.
4 organisations in this map sell it, 2 of them publicly listed.
Its neighbourhood
Everything this entry connects to directly. Click any point to follow it.
The line back to a human being
4 hops from a person at a phase of life. The further a thing sits from the person, the more abstract it looks — and the more it tends to be mistaken for something that came from nowhere.
- SolutionMortgage-backed securities
- FrictionBorrower may not repay
- SolutionMortgage
- FrictionNeed a shared home before you can afford to own one
- Life phaseHousehold formation
- Rooted inScarce resources
- Rooted inShelter
- Rooted inUncertainty
Relieves
Created these new problems
Second-order frictions. This is where most of the modern economy actually lives.
Requires
Who sells it
| Organisation | Value | Type | Products |
|---|---|---|---|
| S&P Global | $160B | public · SPGI | credit ratings, S&P 500 index, market data |
| Moody's | $90B | public · MCO | credit ratings, analytics |
| Fannie Mae | $15B | government · FNMA | agency MBS, mortgage guarantees, HomeReady first-time buyer loans |
| Freddie Mac | $8B | government · FMCC | agency MBS, Home Possible loans |