What are mortgage-backed bonds?
Mortgage-backed bonds or collateralized mortgage obligations (CMOS) are pools of mortgages repurchased by the agencies that issue them. Some of these agencies are better known by their nicknames:
- Ginnie Mae stands for Government National Mortgage Association (GNMA)
- Freddie Mac stands for Federal Home Loan Mortgage Corporation (FNLMC)
- Fannie Mae stands for Federal National Mortgage Association (FNMA)
Each payment the investor receives is for interest only until the returns of principal payments begin.
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Sunday, April 5, 2009
Understanding Bonds - Question 94
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