Gnomes

DEFINITION of 'Gnomes'

15-year, fixed-rate, pass-through securities offered by the Federal Home Loan Mortgage Corporation, or Freddie Mac's, cash program. The securities offered under this program have a maturity of 15 years. A pass-through security pools debt obligations and passes income obligations from the person or entity that owes the debt, to the shareholders. A mortgage-backed certificate is an example of a pass through.

BREAKING DOWN 'Gnomes'

Under the Freddie Mac cash program, Freddie Mac buys mortgages for cash, then forms a pool of mortgages and sells mortgage participation certificates. These represent undivided interest, or an identical percentage interest or share, in these mortgages. Investors sell their mortgages through Freddie Mac's cash program. The 15-year mortgages sold to Freddie Mac form the pool of mortgages that back the securities referred to as gnomes.



RELATED TERMS
  1. Mortgage Participation Certificate

    A type of security that groups together Freddie Mac conventional ...
  2. Guaranteed Mortgage Certificate ...

    A bond backed by a pool of mortgages. These bonds are issued ...
  3. Conventional Mortgage

    A type of mortgage in which the underlying terms and conditions ...
  4. Pass-Through Rate

    The rate on a securitized asset pool - such as a mortgage-backed ...
  5. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
  6. Modified Pass-Through Certificate

    A fixed-income security that passes through an undivided interest ...
Related Articles
  1. Personal Finance

    Fannie Mae, Freddie Mac And The Credit Crisis Of 2008

    Is the U.S. Congress' failure to rein in these mortgage giants to blame for the financial fallout?
  2. Personal Finance

    Fannie Mae and Freddie Mac, Boon Or Boom?

    These two companies are crucial to the mortgage market, but are they ticking timebombs?
  3. Markets

    How Fannie Mae And Freddie Mac Were Saved

    These mortgage giants had to be put under government conservatorship, driving home the gravity of the subprime crisis.
  4. Markets

    Why Fannie Mae And Freddie Mac Might Be In Trouble

    Fannie Mae and Freddie Mac are under increased scrutiny as debates continue about conservatorship, share price, and profit allocations.
  5. Personal Finance

    New Rules May Make It Easier to Get a Mortgage

    Fannie Mae and Freddie Mac have come to terms with lenders on how to solve mortgage disputes. This could be good news for people with lower credit ratings.
  6. Personal Finance

    How Interest Rates Affect the Housing Market

    Understand how rate changes can affect home prices and learn how you can keep up.
  7. ETFs & Mutual Funds

    Top 3 Mortgage Backed Securities (MBS) ETFs (MBB, MBG)

    Discover some of the best opportunities for investors seeking exposure to mortgage-backed securities through utilizing exchange-traded funds.
  8. Managing Wealth

    Now's a Terrific Time to Buy (or Refinance) a Home

    If you are looking to make a purchase or do a refi, you will benefit from continuing low interest rates – that could dip even lower.
  9. Personal Finance

    Which Is Better: A 30-Year or a 15-Year Mortgage?

    Most homebuyers compare the monthly payments between mortgages, but what about these other points?
  10. Entrepreneurship & Small Business

    Remodeling The Housing Finance Industry

    The meltdown in mortgage-backed securities is bringing about reform in home financing.
RELATED FAQS
  1. How do I apply for a loan through a government agency?

    I want to apply for a home loan with Freddie Mac or Fannie Mae. I am not having much luck. Where do I apply?  ... Read Answer >>
  2. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  3. What are the best ways to invest in mortgage-backed securities (MBS)?

    Find out how you can start investing in real estate through mortgage-backed securities. Read Answer >>
  4. Can small investors buy collateralized mortgage obligations (CMOs)?

    Read about collateralized mortgage obligations and their relationship with small investors, plus what risks small investors ... Read Answer >>
  5. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Answer >>
  6. What is the Big Mac index?

    The Big Mac index, also known as Big Mac PPP, is a survey done by The Economist magazine that is used to measure the purchasing ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center