Private Conduit

DEFINITION of 'Private Conduit'

A governmental or private entity that pools mortgages and other loans. The entity will then issue pass- or pay-through securities in its own name, as a private conduit to investors. Many private conduits are now backed by mortgages, credit card receivables and other loans.

BREAKING DOWN 'Private Conduit'

These conduits enable banks and thrifts to more easily sell their loans to investors in the secondary market. This is because smaller lenders are not restricted by the size of the pool or limitations on eligibility. GNMA and FHLMC offered the first private conduits.

RELATED TERMS
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal ...
  2. Conduit IRA

    A traditional IRA that holds only assets that were distributed ...
  3. Real Estate Mortgage Investment ...

    A special purpose vehicle (SPV) that is used to pool mortgage ...
  4. Going Private

    A transaction or a series of transactions that convert a publicly ...
  5. Real Estate Mortgage Investment ...

    A complex pool of mortgage securities created for the purpose ...
  6. Regulation M

    An IRS regulation that allows regulated investment companies ...
Related Articles
  1. Mutual Funds & ETFs

    Asset-Backed Commercial Paper Carries High Risk

    Asset-backed commercial paper has characteristics that make it much more risky than traditional commercial paper.
  2. Investing Basics

    Explaining Privatization

    For a publicly traded company, privatization is the act of transitioning the company to ownership by private individuals.
  3. Investing Basics

    How To Invest In Private Companies

    Owning a private firm means sharing more directly in the underlying firm’s profits.
  4. Investing Basics

    How To Invest In Private Companies

    It can be tough to invest in a company that doesn't trade on an exchange, but there are also several advantages.
  5. Term

    Advantages of Public Vs. Private Companies

    A privately held company is owned by its founder, management or a group of private investors.
  6. Investing Basics

    Why Companies Stay Private

    Many private companies prefer to stay private and find alternate sources of capital. Find out what firms have to gain by eschewing the windfall from a flashy IPO.
  7. Credit & Loans

    Why It’s So Hard to Get Small Mortgage Loans

    Finding a lender to provide a mortgage loan for less than $50,000: It's a challenge faced by a surprising number of people, and one that's often tough to solve.
  8. Financial Advisors

    Is Private Equity the Right Move Now? (PSP, PEX)

    With equities extremely volatile, does it make sense to move to private equity?
  9. Home & Auto

    Exploring Real Estate Investments: Buying And Owning Real Estate

    By Ian Woychuk, CFA In Chapter 2, we presented the investment selection matrix, which outlines your alternatives when choosing the kind of real estate investment to make. You can choose to invest ...
  10. Fundamental Analysis

    Valuing Private Companies

    Even though they’re typically not accessible to the average investor, private firms often raise money through venture capital or private equity investments.
RELATED FAQS
  1. How do I use a conduit IRA?

    An Individual Retirement Account (IRA) is an account that allows individuals to invest a certain amount of pretax income ... Read Answer >>
  2. Why are private equity investments usually reserved for rich people?

    Learn what investors without a high net worth can do to invest in private equity investments, and discover the benefits and ... Read Answer >>
  3. What kinds of private equity investments are out there? (APO, BX)

    Learn why private equity can be so profitable and how to buy this type of investment often reserved for institutional and ... Read Answer >>
  4. What can I do with a Conduit IRA I received as part of a distribution from my Mother’s ...

    I need to understand what can I do with these funds and the potential tax consequences of liquidating and/or rolling over ... Read Answer >>
  5. What is a private secondary market?

    Read about private secondary markets, also called private resale markets, which allow for liquid equity investments outside ... Read Answer >>
  6. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center