Modified Pass-Through Certificate

AAA

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).

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. Collateralized Loan Obligation ...

    A security backed by a pool of debt, often low-rated corporate ...
  5. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
  6. Residential Mortgage-Backed Security ...

    A type of security whose cash flows come from residential debt ...
Related Articles
  1. Profit From Mortgage Debt With MBS
    Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

  2. The Risks Of Mortgage-Backed Securities
    Bonds & Fixed Income

    The Risks Of Mortgage-Backed Securities

  3. Don't Be Misled By Investment Advertising
    Home & Auto

    Don't Be Misled By Investment Advertising

  4. The Income Property: Your Late-In-Life ...
    Home & Auto

    The Income Property: Your Late-In-Life ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center