|Mortgage pass-through security|
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Definition of Mortgage pass-through security
Mortgage pass-through security
Also called a passthrough, a security created when one or more mortgage
mortgage pass-through securities whose principal and interest payments are
Variations of mortgage instruments such as adjustable-rate and variablerate
A security that is collateralized by loans, leases, receivables, or installment contracts
A debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period.
mortgage against which no additional debt may be issued.
A security backed by a pool of pass-throughs , structured so that
A loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest.
A loan based on the credit of the borrower and on the collateral for the mortgage.
Also called private-label pass-throughs, any mortgage pass-through security not
A security that can be converted into common stock at the option of the security holder,
A security representing a debt relationship with an enterprise, including a government
A financial security, such as an option, or future, whose value is derived in part from the
A federal Act that sets minimum operational and funding standards for employee benefit
An ownership interest in an enterprise, including preferred and common stock.
security that grants the security holder the right to exchange the security for the
A time series regression to estimate the betas of securities portfolios.
A nonnegotiable debt security that can be redeemed at some fixed price or according to
A security that pays a specified cash flow over a
security paying dividends or interest that vary with short-term interest rates.
An account for the investment credit to show all income statement benefits of the credit
The practice of reporting to shareholders using straight-line depreciation and
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
Fully modified pass-throughs
Agency pass-throughs that guarantee the timely payment of both interest and
GEMs (growing-equity mortgages)
mortgages in which annual increases in monthly payments are used to
GMCs (guaranteed mortgage certificates)
First issued by Freddie Mac in 1975, GMCs, like PCs, represent
Government National Mortgage Association (Ginnie Mae)
A wholly owned U.S. government corporation
Graduated-payment mortgages (GPMs)
A type of stepped-payment loan in which the borrower's payments
A debt security for which the investing entity has both the positive
The security to which a warrant is attached.
A convertible security whose optioned common stock is trading in a middle range, causing
An insured mortgage protects only the mortgage lender in case you do not make your mortgage payments. This coverage is provided by CMHC [Canada mortgage and Housing Corporation] and is required if a person has a high-ratio mortgage. [A mortgage is high-ratio if the amount borrowed is more than 75% of the purchase price or appraised value, whichever is less.]
An easily traded investment, such as treasury bills, which is
Agency pass-throughs that guarantee (1) timely interest payments and (2) principal
Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven.
A loan secured by the collateral of some specified real estate property which obliges the borrower
Debt instrument by which the borrower (mortgagor) gives the lender (mortgagee) a lien on property as security for the repayment of a loan.
Securities backed by a pool of mortgage loans.
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
A bond in which the issuer has granted the bondholders a lien against the pledged assets.
Mortgage (Credit Insurance)
An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for purposes of purchasing a loan secured by a home.
A modification of standard duration to account for the impact on duration of MBSs of
Commonly sold in the form of reducing term life insurance by lending institutions, this is life insurance with a death benefit reducing to zero over a specific period of time, usually 20 to 25 years. In most instances, the cost of coverage remains level, while the death benefit continues to decline. Re-stated, the cost of this kind of insurance is actually increasing since less death benefit is paid as the outstanding mortgage balance decreases while the cost remains the same. Lending institutions are the most popular sources for this kind of coverage because it is usually sold during the purchase of a new mortgage. The untrained institution mortgage sales person often gives the impression that this is the only place mortgage insurance can be purchased but it is more efficiently purchased at a lower cost and with more flexibility, directly from traditional life insurance companies. No matter where it is purchased, the reducing term insurance death benefit reduces over a set period of years. Most consumers are up-sizing their residences, not down-sizing, so it is likely that more coverage is required as years pass, rather than less coverage.
Mortgage Life insurance (Credit Insurance)
Decreasing term life insurance that provides a death benefit amount corresponding to the decreasing amount owed on a mortgage.
The period from the taking of applications from prospective mortgage borrowers to the
The risk associated with taking applications from prospective mortgage borrowers
The interest rate on a mortgage loan.
The lender of a loan secured by property.
The borrower of a loan secured by property.
A debt or equity security for which there is no posted price or bidand-
mortgage against which additional debts may be issued. Related: closed-end mortgage.
Pass-through coupon rate
The interest rate paid on a securitized pool of assets, which is less than the rate
The net interest rate passed through to investors after deducting servicing, management,
A pool of fixed-income securities backed by a package of assets (i.e. mortgages)
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Passive investment strategy
See: passive management.
A market index portfolio.
Passive portfolio strategy
A strategy that involves minimal expectational input, and instead relies on
Payable through drafts
A method of making payment that is used to maintain control over payments made
An instrument such as a stock or bond for which payments depend only on the financial
Related: Conventional pass-throughs.
RAMs (Reverse-annuity mortgages)
mortgages in which the bank makes a loan for an amount equal to a
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Second pass regression
A cross-sectional regression of portfolio returns on betas. The estimated slope is the
Piece of paper that proves ownership of stocks, bonds and other investments.
Either the collateral on a loan, or some type of equity ownership or debt, such
A share or an interest in a property or an enterprise such as a stock certificate or a bond.
Collateral offered by a borrower to a lender to secure a loan.
Security characteristic line
A plot of the excess return on a security over the risk-free rate as a function of
Security deposit (initial)
Synonymous with the term margin. A cash amount of funds that must be deposited
Security deposit (maintenance)
Related: Maintenance margin security market line (SML). A description of
Security market line
Line representing the relationship between expected return and market risk.
Security Market Line
A graph illustrating the equilibrium relationship between the
security market line
Relationship between expected return and beta.
Security selection decision
Choosing the particular securities to include in a portfolio.
The monetary value placed on security by a lender in determining the extent to which it can make loans against such security.
Social Security Act of 1935
A federal Act establishing Old Age and Survivor’s
Strip mortgage participation certificate (strip PC)
Ownership interests in specified mortgages purchased
Stripped mortgage-backed securities (SMBSs)
Securities that redistribute the cash flows from the
the total completed and sold output of a plant during a period
An agreement to put a specified amount of product per period through a particular
Sales revenue less the cost of materials.
A debt or equity security bought and held for sale in the near term to generate income on short-term price changes.
Options: the security subject to being purchased or sold upon exercise of an option
Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.
Wholesale mortgage banking
The purchasing of loans originated by others, with the servicing rights
The process of creating a passthrough, such as the mortgage pass-through security, by which
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