• 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.

 Embedded terms in definition
 Referenced Terms
 Cats: Are Certificates of Accrual on Treasury Securities. In a Generic sense, the sliced off interest payments or coupons are called strips or zeroes. At those times the discounted bond principal is referred to as the Corpus.

 Collateralized obligation: Is the Generic term for a structure that carves up the initial cash flow from a similar set of assets into a new and often unique arrangement. By dividing and redistributing the cash flows, both principal and interest, the structure alters the disbursement of the underlying collateral cash flows into several securities. Some of these securities may experience greater stability whereas others may absorb more of the risky characteristics of the underlying assets. Under various circumstances, these structures can improve the credit rating of some of the deal's components. Specific categories of these structures are Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations.

 Mortgage backed securities: The pass-throughs issued by Ginnie Mae are referred to as Mortgage Backed Securities.Securities backed by a pool of mortgage loans.Is a broad term which encompasses both Generic and pool specific securities predicated on real property. The term also refers to private label or agency securities, pass-throughs, or derivatives such as Collateralized Mortgage Obligations. It can refer to the Over the-Counter options on mortgage backed securities as well. These mortgage backed securities are viewed as either plain vanilla or exotic. Some of the more common issues are:
  • Accrual or Accretion Bond,
  • ARMs,
  • Companion or Support,
  • Constant Maturity Treasury (CMT),
  • Floaters,
  • Gnomes,
  • Gold,
  • Inverse Floaters or Reverse Floaters,
  • IO or Interest Only,
  • IO-ette or IOette,
  • Jump Bonds,
  • Jump Z,
  • Mega,
  • PAC PO,
  • Pass Throughs,
  • Planned Amortization Class,
  • PO or Principal Only,
  • Reverse TAC,
  • Scheduled Bonds,
  • Stripped Mortgage Backed Securities,
  • Super Floater,
  • Super PAC,
  • Super PO,
  • Support,
  • Targeted Amortization Class,
  • VADM
  • Z Bond, and
  • Z PAC.
There are other types and the list is growing because of the unique nature of these instruments.

 Pass through: A mortgage-backed security on which payment of interest and principal on the underlying mortgages are passed through to the security holder by an agent.Is the term used to represent a Generic class of securitized mortgage notes. Typically, these mortgage backed securities are issued by agencies of the United States, such as FNMA or FHLMC. The underlying collateral is serviced by banks or mortgage companies. The revenue generated by the servicing is considered fee income. The principal and interest payments go to the investors. Two attractive features of these instruments is that the securitization process lowers the regulatory capital requirements for the originating then holding investor. Secondly, the securitization tends to improve the liquidity of the asset.

 Pooling: Is the combining of different loans into standardized or predefined units for trading purposes. This activity increases the homogenization of the underlying collateral. A key benefit of pooling is a diverse, Generic security.

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