Mortgage Cash Flow Obligation - MCFO


DEFINITION of 'Mortgage Cash Flow Obligation - MCFO'

A type of pay-through unsecured general obligation bond that has several classes. Mortgage cash flow obligations (MCFOs) use cash flow from a pool of mortgages that generate revenue to repay investors their principal plus interest. Payments are received from mortgages in the pool and passed on to holders of the MCFO security.

BREAKING DOWN 'Mortgage Cash Flow Obligation - MCFO'

Mortgage cash flow obligations resemble collateralized mortgage obligations (CMOs) in some respects, but they are not the same. MCFOs do not hold a lien on the mortgages held by the security. They are merely obligated by contract to use the income from the mortgages to pay their investors.

  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  2. Real Estate

    Land plus anything on it, including buildings and natural resources.
  3. Collateralized Mortgage Obligation ...

    A type of mortgage-backed security in which principal repayments ...
  4. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  5. Mortgage-Backed Note

    A type of promissory note that is associated with a particular ...
  6. Obligation

    The legal responsibility to meet the terms of a contract. If ...
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