DEFINITION of 'Aggregator'

A party involved within the secondary mortgage market that purchases mortgages from financial institutions and then securitizes them into mortgage-backed securities (MBS). Aggregators earn profit by purchasing individual mortgages at lower prices and then selling the pooled MBS at a higher premium.

BREAKING DOWN 'Aggregator'

Purchasing an MBS tends to be far less risky compared to purchasing an individual mortgage as the pools of mortgages diversifies the source of the individual mortgage's income stream.

Some mortgage originators also become aggregators as securitizing a pool of mortgages can be seen as a natural extension of their business. Plus, doing so would limit losses incurred to the originator in the event that mortgage rates rise, as typically seen when originators would sell the mortgages into the secondary market.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Secondary Mortgage Market

    The market where mortgage loans and servicing rights are bought ...
  3. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  4. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  5. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
  6. Capitalization Rate

    The rate of return on a real estate investment property based ...
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