MORTGAGE BOND

Bond issue secured by a mortgage on the issuer's property, the lien on which is conveyed to the bondholders by a deed of trust. A mortgage bond can be designed as senior, underlying, first, prior, onerlying, junior, second, third and so forth depending on the priority of the lien. Most of mortgage bonds issued by corporations are first mortgage bonds secured by specific real property and also representing unsecured claims on firms' assets.

Source: Dictionary of Finance and Investment Terms, 1998.

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