Charles Schwab offers investors three types of mortgage-backed securities called specialty products. All the mortgages underlying these products are backed by government-sponsored enterprises GSEs. This secure backing makes these products among the better-quality instruments of their kind. The MBSs include those offered by:. Charles Schwab. Fixed Income Essentials. Investing Essentials. Real Estate Investing. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. What Is Securitization? Key Takeaways In securitization, an originator pools or groups debt into portfolios which they sell to issuers. Issuers create marketable financial instruments by merging various financial assets into tranches.
Investors buy securitized products to earn a profit. Securitized instruments furnish investors with good income streams.
Products with riskier underlying assets will pay a higher rate of return. Pros Turns illiquid assets into liquid ones Frees up capital for the originator Provides income for investors Lets small investor play.
Cons Investor assumes creditor role Risk of default on underlying loans Lack of transparency regarding assets Early repayment damages investor's returns. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This has generated criticism from some scholars, who recommend understanding securitisation as a long process of ongoing social constructions and negotiation between various audiences and speakers. Any security issue can be presented on a spectrum ranging from non-politicised the issue has not reached public debate to politicised the issue has raised public concerns and is on the agenda to securitised the issue has been framed as an existential threat.
Security measures in the War on Terror, such as the Guantanamo Bay detention camp, the use of torture, the increased surveillance of citizens, extraordinary renditions and secretive drone strikes, illustrate the logic of exceptionality. Had the War on Terror not been framed in a context in which a suspension of normal politics was permissible and necessary, these security measures would probably not have existed — nor would they have endured to the present day.
After all, audiences are not complete dupes at the mercy of the securitising actor, and by making the process more transparent, securitisation theory endows the audience with agency and responsibility.
In this context, the role of the security analyst moves from objectively analysing the threat to studying the processes by which securitising actors construct a shared understanding of what is collectively recognised as a threat.
The group has been presented as a threat to the security of the state, to the security of individuals in Western Europe and more broadly as a threat to the Western way of life.
This means that the securitisation of the Islamic State group affects at least three sectors: the societal, the military and the political.
Securitisation theory observes that sometimes in a democracy the government must justify the suspension of normal politics to the public. Hence, if the Islamic State group is securitised in European states, which are regarded as democratic, we should be seeing securitising moves from government officials — a rhetorical justification of why intervention, for instance, is the only way to remove the threat of the Islamic State.
It is important to note that securitising actors are not limited to politicians. Security professionals like the police, intelligence services, customs, immigration services, border guards and the military all play an important role in defining the security landscape. Although disagreements and confrontation occur between security professionals, Bigo, Bonditti and Olsson , 75—78 argue that they are still guided by a set of common beliefs and practices. Securitising actors take security threats objectively and seek to solve them by undertaking various missions.
In addition, there are also functional actors who can influence the dynamic of the field of security but who do not have the power to move an issue above politics. Examples of functional actors can be the media, academia, non- governmental agencies and think tanks. It can also include individuals themselves, by telling and sharing stories between friends, families and colleagues. For example, extreme claims made in tabloid newspapers across Europe create a narrative in which the Islamic State group is infiltrating society and working to bring on the demise of the democratic state.
Noticeable examples of securitising moves in the United Kingdom can be found during the House of Commons debate on the motion for British military action in Syria on 2 December The grammar of the security speech act is discernible.
The speech points to the existentially threatening nature of the Islamic State group, a point of no return and a solution which breaks free of the normal democratic processes. In the months after the Paris attacks, Hollande increased French military strikes in Syria and ordered a state of emergency that gave French security forces controversial domestic powers.
Hence, we have a case of successful securitisation. It is important to note that when arguing that the Islamic State group is securitised, securitisation theorists do not challenge the existence of the group, or that the group has indeed coordinated attacks in Europe. Instead, securitisation questions the processes by which this group has come to be viewed as a threat and argues that by naming the group a threat, leaders of European states such as France and the United Kingdom are also implicated in the making of war.
Your Practice. Popular Courses. Investing Investing Essentials. Key Takeaways Debt securitization is the process of packaging debts from a number of sources into a single security to be sold to investors. Many such securities are batches of home mortgage loans that are sold by the banks that granted them. The buyer is typically a trust that converts the loans into a marketable security. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Investing Essentials What Is Securitization? Partner Links. Government National Mortgage Association Ginnie Mae Ginnie Mae is a federal government corporation that guarantees securities that underwrite mortgages, helping lenders serve more homeowners.
A sequential pay CMO is a mortgage obligation that retires tranches in order of seniority. Mortgage-Backed Security MBS A mortgage-backed security MBS is an investment similar to a bond that consists of a bundle of home loans bought from the banks that issued them.
An asset-backed security ABS is a debt security collateralized by a pool of assets. Investopedia is part of the Dotdash publishing family. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
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