A security created from a mortgage pool, and shares are sold to investors.
The principal payments from the mortgage payers get passed through to repay the principal owed to the investors.
The interest payment also gets passed through to the investors. However, not all of it is paid to the investors. A portion of it go to pay servicing or other fees.
The actual rate that gets passed through to the investors is known as the pass-through rate.« Back to Index