Pass-Through Certificate
Barron's Business Dictionary:
Top
Pass-Through Certificate
An investment that receives income from another form. For example, a group of mortgages, called a pool , may be represented by certificates of equal face amounts. The mortgage receipts are collected and passed through to the certificate owners.
| Pascal, Party Line, Party | |
| Pass-Through Entity, Pass-Through Security, Pass-Throughs |
Barron's Real Estate Dictionary:
Top
Pass-Through Certificate
Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.
See COLLATERALIZED MORTGAGE OBLIGATION (CMO). Often guaranteed by ginnie mae.
Example: A mortgage banker sells $5,000,000 of pass-through certificates in $10,000 denominations, supported by an equal amount of VA and FHA mortgages . Monthly collections of interest and principal are remitted to certificate holders, except for 44
⁄ 100
of 1% of the annual principal, kept by the mortgage banker as a servicing fee (Figure 141).
FIG. 141. PASS-THROUGH CERTIFICATES
See COLLATERALIZED MORTGAGE OBLIGATION (CMO). Often guaranteed by ginnie mae.
Example: A mortgage banker sells $5,000,000 of pass-through certificates in $10,000 denominations, supported by an equal amount of VA and FHA mortgages . Monthly collections of interest and principal are remitted to certificate holders, except for 44
⁄ 100
of 1% of the annual principal, kept by the mortgage banker as a servicing fee (Figure 141).
FIG. 141. PASS-THROUGH CERTIFICATES
| Partywall, Parts Per Billion (PPB) | |
| Pass-Throughs, Passive Activityincome |
Investopedia Financial Dictionary:
Top
Pass-Through Certificate
Fixed-income securities that represent an undivided interest in a pool of federally insured mortgages put together by the Government National Mortgage Association (Ginnie Mae).
Investopedia Says:
Mortgage-backed certificates are the most common type of pass-through, where homeowners' payments pass from the original bank through a government agency or investment bank to investors.
Related Links:
Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing. Profit From Mortgage Debt With MBS
To take advantage of all your investing options, you need to know what your choices are. Here we tell you about the diverse features and advantages of 20 different financial instruments. 20 Investments You Should Know
An investor's fixed-income portfolio can easily beat the average bond fund. Learn how and why! Asset Allocation In A Bond Portfolio
Post a question - any question - to the WikiAnswers community:
Copyrights:
Barron's Business Dictionary
Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved.
Read more
Barron's Real Estate Dictionary
Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
Read more
Mentioned in
Participation Certificate (PC)
(in banking)
Modified Pass-Through Certificate
(in banking)
Mortgage-Backed Certificate
(in banking)
Originator
(business term)
» More