Conventional Pass-Through

Conventional Pass-Through

A mortgage-backed or other pass-through security that is not guaranteed by a U.S. Government agency such as Freddie Mac or Ginnie Mae. Until the early 2000s, such securities needed a third-party guarantee or other credit enhancement in order to receive a triple-AAA credit rating. At the beginning of the 2000s, more conventional pass-throughs, especially subprime mortgage-backed securities, began to be issued. Many of these defaulted starting in early 2007, causing a global liquidity crisis. They are also called private-label pass throughs. See also: Credit crunch.