_______________________________ redirect the principal and interest payments of mortgage-backed securities to various classes of bondholders, thereby creating financial instruments with varying prepayment risks.

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Collateralized mortgage obligations (CMOs) redirect the principal and interest payments of mortgage-backed securities (MBS) to various classes of bondholders, creating financial instruments with varying prepayment risks. CMOs can be a complex type of securitization that uses multiple classes with different interest rates and maturity dates to distribute the risks of prepayment and default among investors. VA and FHA insured mortgages are government-backed loans, while secondary markets refer to the buying and selling of securities after their initial issuance.

_______________________________ Redirect the Principal and Interest Payments of Mortgage-Backed Securities