security that passes payments from borrowers to investors as loan payments are collected. Its cash flow is from a pool or pools of underlying loans. The issuer remits, or passes through, to the investor monthly payments of principal and interest. Servicing of the underlying loans is usually done by the seller, who is paid a servicing fee. Actual lives of pass-through securities can be shorter than the stated maturity, because in periods of falling interest rates, borrowers pay off their loans early.
security that passes income from debtors through intermediaries to investors. The most common form of pass-through is a mortgage-backed security, in which the principal and interest payments from homeowners are passed from the banks, mortgage bankers, or savings and loan associations that originated the mortgages to investors.
security, representing pooled debt obligations repackaged as shares, that passes income from debtors through the intermediary to investors. The most common type of passthrough is a mortgage-backed certificate, usually government guaranteed, where homeowners' principal and interest payments pass from the originating bank or savings and loan through a government agency or investment bank to investors, net of service charges. Pass-throughs representing other types of assets, such as auto loan paper or student loans, are also widely marketed.
