risk in MBS

is there credit risk in MBS, i presume its no rite coz its backed by govt…only risk in prepayment… is tat correct?

no credit risk in agency mbs, just prepayment risk. But there is credit risk in non-agency mbs.

What is the effect of defaults in relation to MBS’s? (or any ABS for that matter) - is this regarded as a pre-payment?