what s the relationship between mbs and a bank 
essentially the mortgage backed security turns the bank into an intermediary between the homebuyer and the investment industry a bank can grant mortgages to its customers and then sell them at a discount for inclusion in an mbs the bank records the sale as a plus on its balance sheet and loses nothing if the homebuyer defaults sometime down the road this process works for all concerned as long as everyone does what they re supposed to do the bank keeps to reasonable standards for granting mortgages the homeowner keeps paying on time and the credit rating agencies that review mbs perform due diligence 