Typically speaking, mortgage backed bonds offer exclusive protection that is rarely offered by other similar bonds. They offer the investor a massive amount of collateral in the form of protection as the asset could potentially be sold off to cover any debt that is owed. However, with this extremely good rate of protection comes the major drawback, these sorts of bonds have fairly low rates of yield, especially when compared to the more traditional corporate bonds and private bonds that are only backed by the corporation’s or municipality’s promise and real time ability to return payments.

A mortgage revenue bond is where the investment is in part subsidised by the government or authoritative entity that supports a certain demographic of low income earners to allow them to make home purchases. This type of bond was most popular in the late 80’s and early turn of this decade when borrowers were faced with an inability to purchase houses due to the depressive state of the US economy.