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Cmo

• See Collateralized Mortgage Obligation.

 
 Embedded terms in definition
 Collateralized mortgage obligation
Mortgage
 
 Referenced Terms
 Cbo: Is a Collateralized Bond Obligation. It is similar in structure to a Cmo deal.

 Collateralized mortgage obligation: Is a complex bond structure which reallocates interest and principal payment streams. These tranches, which are often designated as A to Z pieces or securities, are engineered from mortgage backed securities used as the underlying collateral. Collateralized Mortgage Obligations come in many shapes and sizes and are often viewed as unique constructions. Some of the more commonly named tranches are: Interest Only, Principal Only, Floater, Inverse Floater, Planned Amortization Class, Support, Scheduled, Sequential, Targeted Amortization Class, and Z or Accrual Bond. Often, many of these securities contain option characteristics. Related structures are Collateralized Bond Obligations and Collateralized Loan Obligations.Abbreviated 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 bonds on a priority basis as specified in the prospectus. Related: mortgage pass-through securityA Collateralized Mortgage Obligation (Cmo) is a vehicle that repackages the cashflows in a way that redistributes prepayment risk.

 Collateralized mortgage obligations: Abbreviated Cmo. Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

 Generic: Refers to the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific Cmo issue.

 Interest only: Is a security whose value is predicated on a discounted interest rate structure. Typically, this is a Cmo type derivative product. Prepayment activity is a dominant evaluation factor.

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