Dictionary of Banking Terms: conduit
conduit
government or private organization that assembles mortgageand other loans into a large pool, and issues pass-through or pay-through securities in its own name to investors. The first mortgage conduits were established by the Government National Mortgage Association and the Federal Home Loan Mortgage Corp. Private sector conduits have since been organized by mortgage insurance companies and financial institutions to issue securities backed by mortgages, credit card receivables, boat loans, and other loans, without federal agency guarantee. Mortgage conduits make it easier for a large number of banks and thrifts to sell their loans to secondary market investors, as smaller lenders are not limited by pool size or eligibility restrictions.
