asset-backed security (ABS) is a security supported by a pool of loans or receivables. That is, the cash flow to pay the holders of the security comes from the cash flow of the underlying loans or receivables. A mortgage-backed security (MBS) refers to an ABS created by pooling mortgage loans on real estate property. While technically the MBS mar- ket is part of the ABS market, in the United States, the two markets are viewed as being separate. There are many short-term fixed-rate products and floating-rate products in this market that fall into the money market area. In this chapter we discuss mortgage-backed securities and in the next we focus on asset-backed securities.       MORTGAGE LOANS   While any type of mortgage loans-residential or commercial-can be used as collateral for an MBS, most are backed by residential mort- gages. We begin our coverage of MBS products with a description of the raw product-the mortgage loan.   Mortgage Designs There are many types of mortgage designs. By a mortgage design we mean the specification of the interest rate (fixed or floating), the term of the mortgage, and the manner in which the principal is repaid. We sum- marize the major mortgage designs below.