Asset-Backed Securities


  • A financial security whose value and income are backed by an asset or pool of assets. Asset-backed securities (ABS) are similar to mortgage-backed securities, but instead of using mortgages as backing, asset-backed securities use moderately sized illiquid assets such as home equity loans, auto loans and leases, credit card receivables, and student loans as backing.

Financial security made up of a bundle of assets.

asset collateralized security, asset-backed security


Alternate Spellings
Asset-Backed Security, Asset Back Security

Related Terms and Acronyms

  • Equity Definition,
    • Ownership in an asset.
    • The value of a property minus outstanding mortgage debt and other liens.
  • Fixed-Return Investments Definition,
    • Investments that provide a stable return.
  • Issuer Definition,
    • A legal entity that develops, registers, and sells securities including stocks, bonds and derivatives.
  • Mortgage (mtg) Abbreviation, Important,
    • A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
  • Mortgage-Backed Securities Definition, Important,
    • Securities backed by mortgage debt.
  • Mortgage-Backed Security (MBS) Acronym, Very Important,
    • Securities backed by mortgage debt.
  • Portfolio Lender Definition,
    • A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.
  • Secondary Market Definition,
    • A market where financial instruments such as stocks, bonds, options and futures are bought and sold to investors.
  • Secondary Mortgage Market Definition, Important,
    • The trade in home loans that are bundled together and sold as securities to investors. It frees money so more people can get mortgages.
  • Security Definition,
    • A tradable financial implement that represents ownership, the rights to ownership or debt.
    • Property designated as collateral.
    • A document stating ownership of a stock or bond.
  • Syndicated Loans Definition,
    • Loans given to a company that are backed by a group of banks who share the risk of a large transaction. There is usually a lead bank and several participating banks.
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