pass-through security

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Pass-Through Security

A derivative security representing the receivables on some debt. That is, a shareholder of a pass-through security is entitled to a portion of the income from the debt. Generally, a pass-through security has a large number of debts underlying it; for example, a pass-through may represent a portion of several hundred car loans. The most common type of pass-through is a mortgage-backed security.

pass-through security

A security that passes through payments from debtors to investors. Packages of loans are assembled and sold to investors by private lenders. Although pass-through securities have stated maturities, the actual lives of the securities are likely to be shorter, especially during periods of falling interest rates when borrowers pay off mortgages early. The security derives its name from the fact that interest and principal payments made by borrowers are passed through monthly after deduction of a service fee. Also called pass through. See also Ginnie Mae pass through, production rate, weighted-average coupon rate, weighted-average maturity.

Pass-through security.

When a corporation or government agency buys loans from lenders to pool and package as securities for resale to investors, the products may be pass-through securities.

That means regular payments of interest and return of principal that borrowers make on the original loans are funneled, or passed through, to the investors.

Unlike standard bonds, whose principal is repaid at maturity, the principal of a pass-through security is repaid over the life of the debt.

The best known pass-throughs are the mortgage-backed bonds offered by Fannie Mae, Freddie Mac, and Ginnie Mae. However, you can also buy pass-through securities backed by car loans, credit card debt, and other types of borrowing. Those are known as asset-backed securities.

References in classic literature ?
Jean Pied-du-Port, and by six Sir Nigel's Company, three hundred strong, were on their way for the defile, pushing swiftly in the dim light up the steep curving road; for it was the prince's order that they should be the first to pass through, and that they should remain on guard at the further end until the whole army had emerged from the mountains.
For it is manifest that the tie, moderately straightened, while adequate to hinder the blood already in the arm from returning towards the heart by the veins, cannot on that account prevent new blood from coming forward through the arteries, because these are situated below the veins, and their coverings, from their greater consistency, are more difficult to compress; and also that the blood which comes from the heart tends to pass through them to the hand with greater force than it does to return from the hand to the heart through the veins.
I conclude that your baggage is too heavy to allow you to pass through the gates of Paradise.
Leaving Mandetiba, we continued to pass through an intricate wilderness of lakes; in some of which were fresh, in others salt water shells.
We are surrounded with stronger things than bars or bolts; on the north side, an unnavigable ocean, where ship never sailed, and boat never swam; every other way we have above a thousand miles to pass through the Czar's own dominion, and by ways utterly impassable, except by the roads made by the government, and through the towns garrisoned by his troops; in short, we could neither pass undiscovered by the road, nor subsist any other way, so that it is in vain to attempt it.
Shooting a High Country Excallber at 62 pounds, I have got pass throughs on all of these, and the blades have always opened on my broadheads.
85% class A pass throughs ser 1996-1 due 1/2/2011 AA- 6.
CALFED $345 MILLION MORTGAGE PASS THROUGHS RATED 'AA' BY FITCH