10-18.The investor is said to have an undivided interest in the pool of mortgages or ownership in the mortgages in the following type of mortgage-related security:

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The type of mortgage-related security where the investor has an undivided interest in the pool of mortgages is a mortgage passthrough security. Passthrough securities are created when a lender sells a pool of mortgages to a government agency, such as Ginnie Mae, or to a private issuer, such as Freddie Mac or Fannie Mae. The cash flow generated by the underlying mortgages is passed through to investors in the form of interest and principal payments. Collateralized mortgage obligations (CMOs) are a type of mortgage-related security that are structured differently from mortgage passthrough securities, as they involve the creation of different classes or tranches with varying levels of risk and return. Mortgage pay-through bonds and mortgage-backed bonds are not specific types of mortgage-related securities and do not necessarily involve an undivided interest in a pool of mortgages.

10-18The Investor Is Said to Have an Undivided Interest in the Pool