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3. What is a mortgage backed security (MBS)? Why is it difficult for ratings agencies to determine the risk of mortgage backed securities? How can the MBS help homebuyers in the United States? How did the MBS spread financial troubles around the world in 2008?

Pls write it on a paper and post picture here.. Should be atleast 100 words. Full ratings if instructions being followed.

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Answer: Mortgage backed securities (also known as MBS) refers to the investments that are secured by mortgages or collection of mortgages. They are asset-backed type of security. A security is an investment which is traded on a secondary market and permits the investors to benefit from the business of mortgage without ever having to buy or sell an actual home loan. Credit rating agencies rate the tranches of mortgage-backed securities on the basis of the mortgages they represent; however the problem is it depends on the underlying mortgages and the details of the mortgages are not disclosed in financial statements. It helps homebuyers in the United States because it allows investors to gain from the mortgage business without ever having to buy or sell an actual home loan.

Mortgage brokers and lenders, played the role of the middle men, determined who got loans, and approved “no documentation” and “low documentation” loans and afterwards passed on the responsibility for those loans on to others in the mortgage backed assets form. In 2008 crisis Mortgage-holders took out excessive loans they never intended to pay, and lenders made loans they knew the borrowers could not afford. The high risk mortgage loans by commercial banks of United States were the fuel that ignited the financial crisis. Rating agencies were paid by investment banks, however had no liabilities if their ratings are proven incorrect

Answer: Mortgage backed securities (also known as MBS) refers to the investments that are secured by mortgages or collection of mortgages. They are asset-backed typeofsecurity. A security is an investment which is traded on a secondary market and permits the investors to benefit from the business of mortgage without ever having to buy or sell an actual home loan Credit rating agencies rate the tranches ofmortgage-backed securities on the basis of the mortgages they represent; however the problem is it depends on the underlying mortgages and the details of the mortgages are not disclosed in financial statements. It helps homebuyers in the United States because it allows investors to gain from the mortgage business without ever having to buy or sell an actual home loan Mortgage brokers and lenders, played the role of the middle men, determined who got loans and approvedno documentation andlow documentationloans and afterwards passed on the responsibility for those loans on to others in the mortgage backed assets form. In 2008 crisis Mortgage-holders took out excessive loans they never intended to pay, and lenders made loans they knew the borrowers could not afford. The high risk mortgage loans by commercial banks of United States were the fuel that ignited the financial crisis. Rating agencies were paid by investment banks, however had no liabilities if their ratings are proven ncorrect

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