Investments often carry inherent risk. The chance that a borrower will default on a loan is present and real. Insurance against default on certain bonds and securities exist in the form of financial guaranty insurance. California is one of the largest states in the union and carries a GDP larger than some countries. With all this money changing hands, investment in commercial mortgage-backed securities (CMBS) or municipal bonds can be a tempting prospect. Financial guaranty in California can be provided by these types of insurance policies for these types of investments.
A commercial mortgage-backed security, on the front end, is a group of loans facilitated by a bank to an array of commercial real estate owners in the form of individual mortgages. On the back end a CMBS is funded by money from investors who recoup principal and interest on their investment. A municipal bond is similar in that individual investors also provide funding, but instead of money allocated to commercial mortgages its provided to a municipality for things like infrastructure improvements. Investors can achieve peace of mind through financial guaranty in California by purchasing an insurance policy from a reputable broker on these types of investment. Principle and interest on the insured loans is guaranteed, and investors can sleep well at night knowing their monetary returns are secured.