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Just as this article describes a bond as a 30-year bond with 6% coupon rate, this article describes a pass-through MBS as a $3 billion pass-through with 6% pass-through rate, a 6.5% WAC, and 340-month WAM. The pass-through rate is different from the WAC; it is the rate that the investor would receive if he/she held this pass-through MBS, and ...
Pass-through securities: In this type of mortgage-backed security, a trust holds many mortgages and allocates mortgage payments to its various investors depending on what share of the securities ...
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt ...
Since prepayments typically rise as interest rates fall and vice versa, the basic (pass-through) MBS typically has negative bond convexity (second derivative of price over yield), meaning that the price has more downside than upside as interest rates vary. The MBS-holder's exposure to borrower prepayment has several names: call risk; extension risk
Common underlying assets held may include mortgage-backed securities, commercial real estate bonds and corporate loans. The SPE issues bonds to investors in exchange for cash, which are used to purchase the portfolio of underlying assets. Like other ABS private label securities, the bonds are not uniform but issued in layers called tranches ...
Residential mortgage-backed security (RMBS) are a type of mortgage-backed security backed by residential real estate mortgages. [1]Bonds securitizing mortgages are usually treated as a separate class, making reference to the general package of financial agreements that typically represents cash yields that are paid to investors and that are supported by cash payments received from homeowners ...
MBS instruments are commonly referred to as "pass-through" certificates because the principal and interest of the underlying loans is "passed through" to investors; because of Ginnie Mae's financial backing, these MBS instruments are particularly attractive to investors and, like other Agency MBS instruments, are eligible to be traded in the ...
REMICs are investment vehicles that hold commercial and residential mortgages in trust and issue securities representing an undivided interest in these mortgages. A REMIC assembles mortgages into pools and issues pass-through certificates, multiclass bonds similar to a collateralized mortgage obligation (CMO), or other securities to investors in the secondary mortgage market.