Question : Can you answer to this question on Residential Mortgage Backed Securities?
In recent times, because US banks have sold many Residential mortgage-backed securities to the Bank of Japan and China, when many refuses to pay or defaults, the ones who will absorb much of the loss will be the Bank of Japan or China? What about banks? How do RMBS work?
residential mortgage

Best answer:

Answer by Ronnie F
Residential mortgage-backed securities (RMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on residential rather than commercial real estate.

A type of security whose cash flows come from residential debt such as mortgages, home-equity loans and subprime mortgages. This is a type of mortgage-backed securities that focuses on residential instead of commercial debt.

Holders of an RMBS receive interest and principal payments that come from the holders of the residential debt. The RMBS comprises a large amount of pooled residential mortgages.