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A collateralized debt obligation (CDO) is a type of structured asset-backed security (ABS). [1] Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing mortgage-backed securities (MBS).
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 collateralized debt obligation, or CDO.
For example, a $300,000 30 year mortgage with an interest rate of 6.5% could be split into 300 1000-dollar bonds. These bonds would have a 30-year amortization, and an interest rate of 6.00% for example (with the remaining 0.50% going to the servicing company to send out the monthly bills and perform servicing work).
Many CDOs are collateralized by various types of mortgage-backed securities and other mortgage-related assets. [7] An extension of these CDOs are "synthetic" CDOs which are collateralized by credit default swaps and other derivatives. [8] Collateralized bond obligations are collateralized debt obligations backed primarily by corporate bonds.
Collateralized debt obligations (CDO) is a type of structured asset-backed security (ABS). Collateralized mortgage obligations (CMO) is a type of complex debt security that repackages and directs the payments of principal and interest from a collateral pool to different types and maturities of securities, thereby meeting investor needs.
The secondary mortgage market is the market for the sale of securities or bonds collateralized by the value of mortgage loans.A mortgage lender, commercial bank, or specialized firm will group together many loans (from the "primary mortgage market" [1]) and sell grouped loans known as collateralized mortgage obligations (CMOs) or mortgage-backed securities (MBS) to investors such as pension ...
Because the government spends more money than it collects in tax revenue, lawmakers need to periodically tackle the issue -- a politically difficult task, as many are reluctant to vote for more debt.
source: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, p.229, figure 11.4 Credit rating agencies came under scrutiny following the mortgage crisis for giving investment-grade, "money safe" ratings to securitized mortgages (in the form of securities known as mortgage-backed securities (MBS) and collateralized debt obligations ...