Collateralized Mortgage Obligation - CMO
- Collateralized Mortgage Obligation - CMO
- A type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities, called tranches. The repayments from the pool of pass-through securities are used to retire the bonds in the order specified by the bonds' prospectus.
Here is an example how a very simple CMO works: The investors in the CMO are divided up into three classes. They are called either class A, B or C investors. Each class differs in the order they receive principal payments, but receives interest payments as long as it is not completely paid off. Class A investors are paid out first with prepayments and repayments until they are paid off. Then class B investors are paid off, followed by class C investors. In a situation like this, class A investors bear most of the prepayment risk, while class C investors bear the least.
Investment dictionary.
Academic.
2012.
Look at other dictionaries:
Collateralized mortgage obligation (CMO) — A security backed by a pool of pass throughs , structured so that there are several classes of bondholders with varying maturities, called tranches. The principal payments from the underlying pool of pass through securities are used to retire the … Financial and business terms
collateralized mortgage obligation — ( CMO) A type of MBS created by dividing the rights to receive the principal and interest cash flows from an underlying pool of mortgages into separate classes or tiers. The tiers or classes are usually called tranches. In other words, it is a… … Financial and business terms
Collateralized mortgage obligation — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
collateralized mortgage obligation — n: a bond collateralized by a pool of mortgage obligations or pass through securities and paid according to the maturity and amortization schedule of its class and not directly from the underlying obligations – called also CMO; see also remic… … Law dictionary
Collateralized loan obligation — Collateralized loan obligations (CLOs) are a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of owners in various tranches. A CLO is a type of… … Wikipedia
Collateralized debt obligation — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
Collateralized fund obligation — A collateralized fund obligation (CFO) is a form of securitization involving private equity fund or hedge fund assets, similar to collateralized debt obligations. CFOs are a structured form of financing for diversified private equity portfolios,… … Wikipedia
Collateralized Bond Obligation — A Collateralized Bond Obligation is an investment grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to … Wikipedia
Collateralized Debt Obligation - CDO — An investment grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non mortgage loans or bonds. Similar in structure to a collateralized mortgage obligation (CMO) or… … Investment dictionary
Collateralized Bond Obligation - CBO — An investment grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to be investment grade. Similar in… … Investment dictionary
