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Pac

• See Planned Amortization Class security.

 
 Embedded terms in definition
 Amortization
Class
Planned amortization class
Security
 
 Referenced Terms
 Lock out: With Pac bond CMO classes, the period before the PAC sinking fund becomes effective. With multifamily loans, the period of time during which prepayment is prohibited.

 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.

 Pac pos: Are Principal Only issues which are predicated on a predetermined Pac prepayment schedule, range, or collar.

 Planned amortization class: Is a security which is structured to have a reasonable life expectancy provided the prepayment speeds stay within the defined ranges. The scheduled interest and principal payments tend to be more stable for these tranches relative to the other parts of the deal.CMO (1) One class of CMO that carries the most stable cash flows and the lowest prepayment risk of any class of CMO. Because of that stable cash flow, it is considered the least risky CMO. (2) A CMO bond class that stipulates cash-flow contributions to a sinking fund. With the Pac, principal payments are directed to the sinking fund on a priority basis in accordance with a predetermined payment schedule, with prior claim to the cash flows before other CMO classes. Similarly, cash flows received by the trust in excess of the sinking fund requirement are also allocated to other bond classes. The prepayment experience of the PAC is therefore very stable over a wide range of prepayment experience.

 Preauthorized check: Abbreviated Pacs. Checks that are authorized by the payer in advance and are written either by the payee or by the payee's bank and then deposited in the payee's bank account.Abbreviated Pac. A check written by the payee against a customer's checking account for a previously agreed-upon amount. Because of prior legal authorization, the check does not require the customer's signature.

 
 Related Terms
 Pac man strategy
Pac pos
Super pac

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