Modified Pass-Through Certificate


DEFINITION of 'Modified Pass-Through Certificate'

A fixed-income security that passes through an undivided interest in a pool of mortgages. Modified pass-through certificates are backed by federal loans of identical maturity and coupon date. Principal and interest payments are made to investors each month, and these payments are guaranteed by the Government National Mortgage Association (GNMA).

BREAKING DOWN 'Modified Pass-Through Certificate'

Categorically, these certificates are a type of pass-through certificate. When a mortgage banker has accumulated at least $2 million of mortgages, a certificate is issued for them after the banker deposits the loans. These certificates differ from CMOs and mortgage backed bonds in that they do not hold back interest payments.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Bank

    A financial institution licensed as a receiver of deposits. There ...
  3. Ginnie Mae - Government National ...

    A U.S. government corporation within the U.S. Department of Housing ...
  4. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based ...
  6. Derivative

    A security with a price that is dependent upon or derived from ...
Related Articles
  1. Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

    Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing.
  2. Bonds & Fixed Income

    The Risks Of Mortgage-Backed Securities

    Find out how weighted average life guards against prepayment risk.
  3. Home & Auto

    5 Mistakes That Make House Flipping A Flop

    If you're just looking to get rich quick, you could end up in the poorhouse.
  4. Entrepreneurship

    Top 10 Features Of a Profitable Rental Property

    Find out which factors you should weigh when searching for income-producing real estate.
  5. Bonds & Fixed Income

    Credit Default Swaps: An Introduction

    This derivative can help manage portfolio risk, but it isn't a simple vehicle.
  6. Professionals

    Alternatives: Will a Market Correction Lift Them?

    When were are surging, advisors and their wealthy clients asked why they should bother with lagging alternatives. Will that change with a correction?
  7. Investing Basics

    Water Investments: Will They Sink or Swim?

    Will these water-related investments sink or swim?
  8. Stock Analysis

    In Focus: Water Scarcity

    After a discussion, sponsored by CDP, we share the importance of water disclosure as it relates to businesses operating amid increasing water scarcity.
  9. Investing

    Undervalued Real Esate at Forestar Group

    Activists move to unlock the value of Forestar Group.
  10. Investing

    The Rise And Fall And Rise Of Bitcoin

    A look at the reasons behind the recent spectacular surge in bitcoin prices.
  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. Can hedge funds outperform the market?

    Generating returns that exceed those provided by the broader market is the goal of nearly every investor. However, the methods ... Read Full Answer >>
  3. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  4. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  5. How are American Depository Receipts (ADRs) priced?

    The price of an American depositary receipt (ADR) is determined by the bank or other financial institution that issues it. ... Read Full Answer >>
  6. How are American Depository Receipts (ADRs) exchanged?

    American depositary receipts (ADRs) are bought and sold on regular U.S. stock exchanges, either in the over-the-counter market ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center