Mortgage Pass-Through Security

Mortgage Pass-Through Security - Mortgage Pass-Through Security is a security created when one or more of the mortgage holders form a collection pool of the mortgages and sell the shares or participation certificates in the pool, a pass-through. A mortgage pass-through security consists of a set of marketable shares in a portfolio of mortgages for which investors received monthly payments of both interest and principal. Normally the package secured by credit insurance (PMI) so the investors are safe from the credit risks of the individual mortgages in the portfolio. No protection provided against the cash flow and return volatility associated with unanticipated principal prepayments.