An interest-only (IO) mortgage pass-through strip has a claim on the present value of interest payments on the mortgages in a NHA MBS pool.

Question

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An IO mortgage pass-through strip is a type of mortgage-backed security that only receives interest payments from the underlying mortgages in the pool. Therefore, it does have a claim on the present value of interest payments but not on the principal payments.

An Interest-Only (IO) Mortgage Pass-Through Strip Has a Claim on the Present