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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).

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