Mortgage pass-through security

Definition:

Also called a passthrough, a security created when one or more mortgage holders form a collection (pool) of mortgages and sells shares or participation certificates in the pool. The cash flow from the collateral pool is "passed through" to the security holder as monthly payments of principal, interest, and prepayments. This is the predominant type of MBS traded in the secondary market.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Arizona Stock Exchange

A single price auction exchange for equity trading that allows anonymous buyers and sellers to trade at low transaction costs.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio