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What Is a Mortgage Pool? A mortgage pool is a group of mortgages held in trust as collateral for the issuance of a mortgage-backed security. Some mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae are known as "pools" themselves. These are the simplest form of mortgage-backed security.
A collateralized mortgage obligation (CMO) is a fixed-income security with a pool of mortgage loans that are similar in a variety of ways, like credit score or loan amount, and are combined and resold as a single packaged investment to investors called a security.
Mortgage-backed securities (MBS) are variations of asset-backed securities that are formed by pooling together mortgages exclusively. The investor who buys a mortgage-backed security is essentially lending money to home buyers. An MBS can be bought and sold through a broker.
Types of Tranches Senior Tranches. Senior tranches, often called the 'A-Tranche,' represent the most secure portions of a debt security. ... Mezzanine Tranches. ... Junior Tranches. ... Risk Profile. ... Yhield and Return. ... Credit Ratings. ... Tranche Slicing. ... Cash Flow Waterfall.
The ?Pooling and Servicing Agreement? is the legal document that contains the responsibilities and rights of the servicer, the trustee, and others over a pool of mortgage loans.
Tranches are segments created from a pool of securities?usually debt instruments such as bonds or mortgages?that are divvied up by risk, time to maturity, or other characteristics in order to be marketable to different investors.