what is a mortgage bond 
a mortgage bond is a bond that is secured by a mortgage or a pool of mortgages that are typically backed by real estate holdings and real property such as equipment the income stream of a mortgage bond comes from the mortgage payments that homeowners make on their mortgages understanding mortgage bondsmortgage bonds offer the investor protection because the principal is secured by a valuable asset in the event of default mortgage bondholders could sell off the underlying property to compensate for the default and secure payment of income however because of this inherent safety the average mortgage bond tends to yield a lower rate of return than traditional corporate bonds that are backed only by the corporation s promise and ability to pay 