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Stripped Mortgage-Backed Security (SMBS)
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Stripped Mortgage-Backed Security (SMBS)
(1) As in the Government
Strips
market
, collateralized mortgage
obligations
are decomposed to create a variety of specialized instruments, such as 'interest only' or 'principal only' obligations and a variety of other MBS
structures
. (2) Any segment of the mortgage payment stream
underlying
a
Collateralized Mortgage Obligation (CMO)
or a
Real Estate Mortgage Investment Conduit (REMIC)
that has been divided into a series of
tranches
, usually based on the nominal
coupons
of the mortgages or the classification of payments as interest or principal. See Collateralized Mortgage Obligation (CMO),
Interest Only (IO) Obligation
,
Principal Only (PO) Obligation
, Real Estate Mortgage Investment Certificate (REMIC).
Glossary
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