Mortgage bonds are a kind of securities that are issued by the issuer to purchase mortgage claims. These bonds can be traded in stock exchanges or over-the-counter markets.

Debt buying bonds are a kind of securities that are issued for purchasing term claims of legal entities, excluding claims arising from Salam contracts. These bonds can be traded in stock exchanges or over-the-counter markets. Since the nature of these two bonds is the same in terms of Shariah view, therefore, the jurisprudential requirements come together:

Asset Base

. In these bonds, the debt must be transferred to the bond buyers (Note: It shall be removed from the originator's balance sheet and transferred to the intermediate entity's balance sheet).
. Only real debt documents (which result from a real transaction) can be discount. Hence banks can convert debt facilities (facilities granted through exchange contracts except Salam ones) into securities and sell them in the market.

Primary Market

. Underwriting of mortgage bonds and purchase of debt can be with or without discount.
Before the issuance of bonds, investors cannot buy debt. The purchase of debt shall be done after issuing the bonds and paying the amount by the investors.

Secondary Market
. Mortgage bonds and debt buying can be traded in the secondary market.

Bond Guarantee

Bond guarantee can be done in two ways:

. Originator (debt seller bank) can undertake the collection of claims.
. Transfer of documents and mortgaged collaterals to investors.