Common Types of Mortgage-Backed Securities

Established by Dirk Coetzer and Gregory Upton in 2008, Icon Capital Sarl is based in Capellen, Luxembourg. A securitization fund, Icon Capital Sarl manages a range of securitization assets, including mortgage-backed securities.

Comprised of similar, pooled mortgage loans, mortgage-backed securities are most often based on residential property. Divided into governmental, quasi-governmental, or private entity categories, depending on the company that originated the loan, the securities can fall into a number of structure types.

Pass-through participation certificates, one of the most common types of mortgage-backed securities, are usually issued or guaranteed by a lender such as Freddie Mac or Fannie Mae. The security’s issuer collects the monthly mortgage payments from the homeowners and passes payments on to the investors, delivering a secure, although variable, cash flow that matures in five, seven, 15, or 30 years. Another type, collateralized mortgage obligations, draws from large home mortgage pools. Because these securities use a complicated deal structure, the amount paid to investors varies depending on interest rates and other market risks.

Advertisements

Tagged: , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: