CMO/REMIC means a collateralized mortgage obligation or real estate mortgage investment conduit.

What is a CMO payment?

A sequential pay collateralized mortgage obligation (CMO) is a pooled debt instrument where the tranches are amortized in order of seniority. In a sequential pay CMO, each tranche receives interest payments as long as the tranche’s principal amount has not been completely paid off.

How are CMOs taxed?

The interest portion of payments to CMO investors is subject to federal, state, and local income tax. If the security is purchased at a discount in the secondary market (market discount), the investor may be subject to a tax on the amount of principal received in excess of the purchase price as well as on the interest.

Is a Remic a CMO?

REMICs are complex investments that generate income for issuers and investors. REMICs piece together individual mortgages into pools based on risk and maturity, just like collateralized mortgage obligations (CMOs). They are divided into bonds or other securities that are then sold to investors.

How is CMO calculated?

The CMO indicator is created by calculating the difference between the sum of all recent higher closes and the sum of all recent lower closes and then dividing the result by the sum of all price movement over a given time period. The result is multiplied by 100 to give the -100 to +100 range.

What does REMIC stand for?

real estate mortgage investment conduit
The term real estate mortgage investment conduit (REMIC) refers to a special purpose vehicle (SPV) or debt instrument that pools mortgage loans together and issues mortgage-backed securities (MBS).

Which type of CMO structure has the most stable average life?

The support hond class is used to create a more stable average life for the PAC bond class. PAC bondholders have priority over all other classes in the CMO issue in receiving principal payments from the underlying collateral.

What are two risks that a CMO investor faces?

Mortgage-backed securities are subject to many of the same risks as those of most fixed income securities, such as interest rate, credit, liquidity, reinvestment, inflation (or purchasing power), default, and market and event risk. In addition, investors face two unique risks—prepayment risk and extension risk.

Is a REMIC a CMO?