FINE 445 Chapter Notes - Chapter 20: Adjustable-Rate Mortgage, Prepayment Of Loan, Commercial Mortgage
Document Summary
Mptbs are issued against mortgage pools and, like mpts, cash flows from the pool are passed through to security holders. However, unlike an mpt, this security is a bond and not an undivided equity ownership interest in a mortgage pool. Like the mbb, the mptb is a debt obligation of the issuer, who retains ownership of the mortgage pool. Name two different ways that mptbs can be overcollateralized. The are overcollateralized in two ways: (1) more mortgages in the pool than the sum of the securities issued against it or (2) additional collateral in the form of u. s. government bonds or other agency obligations. Explain why a cmo has been called as much of a marketing innovation as a financial innovation. A cmo is a type of mortgage-backed security where a pool of mortgages is used as collateral for several different classes of securities. Each class has different investment characteristics which would appeal to different types of investors.
