While collateralised mortgage obligation (CMO) is still the primary mechanism for securitisation, the pass-throughs are a second and growing vehicle for securitising bank assets.

Question

Quizplus · Accepted Answer

Pass-through securities are actually the most basic form of mortgage-backed securities and have been a primary vehicle for securitizing mortgage loans. CMOs, which are a more complex type, came later to address certain limitations and risks associated with pass-throughs, such as prepayment risk.

While Collateralised Mortgage Obligation (CMO) Is Still the Primary Mechanism