A form of securitisation and a type of Mortgage Backed Security (MBS) . Mortgages are pooled together and sold to a special purpose vehicle (SPV). The SPV issues securities using the mortgages as collateral. The securities are divided into different classes according to their prepayment schedule. See Prepayment Risk.
Join our mailing list or RSS feed for more advice on the meaning of banking terms Collateralised Mortgage Obligation (CMO). And why not leave a comment below?
Do you have an example of where Collateralised Mortgage Obligation (CMO) can be used in context. Help me develop the site by leaving an example below. Every example using ‘Collateralised Mortgage Obligation (CMO)’ gets you another entry into the draw for 100 GBP of Amazon vouchers.
A winner will be selected on [date].