Also found in: Medical, Acronyms, Wikipedia.


Collateralized Mortgage Obligation

An asset-backed security backed by mortgages. Banks package and sell their receivables on mortgages to investors in order to reduce the risk coming from defaults. Returns on CMOs are paid in tranches; that is, an individual mortgages backing CMOs have different maturities and investors are paid out according to their level of investment. Banks offer higher interest rates to investors willing to buy CMOs backed by higher-risk mortgages, such as subprime mortgages. See also: Collateralized loan obligation.


Collateralized mortgage obligation (CMO).

CMOs are fixed-income investments backed by mortgages or pools of mortgages.

A conventional mortgage-backed security has a single interest rate and maturity date. In contrast, the pool of mortgages in a CMO is divided into four tranches, each with a different interest rate and term.

Owners of the first three tranches receive regular interest payments and principal is repaid to reflect the order in which the tranches mature. The fourth tranche is usually a deep-discount zero coupon bond on which interest accrues until maturity, when the full face value is repaid.

CMOs usually involve high-quality mortgages or those guaranteed by the government. Their yield may be lower than those of other mortgage-backed investments.

However, the way in which they are repaid makes them especially attractive to institutional investors including insurance companies and pension funds.

The risk, as with all mortgage-backed securities, is that a change in interest rates can affect the rate of repayment and the market value of the CMO.


See collateralized mortgage obligation.

References in periodicals archive ?
Moreover, the committee also looked into the gross salary packages and the allowances being given to the officials of three secretariats Civil Secretariat, CMO and Governor House.
For the CMO, early partnering with the sponsor in terms of setting expectations and norms early on is key.
CMO Software is highly complementary to Mitratech's fast-growing global customer base of large multinational and middle market corporations representing more than 750 companies and 11,000 law firms spanning the Americas, EMEA and APAC.
The CMO translates administrative imperatives to the medical staff and provides a clinical perspective to administrative vision and strategy.
CMO Council reveals in the study that forming close relationship with peers, especially with chief financial officers and chief information officers, proves beneficial.
The CMO has to deal with a larger share of technology component in marketing.
The updated CMO will be submitted to all industry stakeholders by next week for feedback before the rates are finalized, he added.
He will work with each of the L'Oreal geographic zones in defining their CMO priorities and roadmaps, their organization guidelines, and to functionally lead the growing CMO teams across the world.
A recent study conducted by the CMO Council and NetLine found that business buyers give vendors poor marks for the value and trustworthiness of their online content.
WORLDWIDE COMPUTER PRODUCTS NEWS-July 18, 2013-3M and CMO Compliance partner to enhance 3M Firestop Management System(C)1995-2013 M2 COMMUNICATIONS http://www.
According to the findings of a new study from the CMO Council, in partnership with SAS, both marketers and IT executives believe big data is a key competitive differentiator and will be core to implementing a more customer-centric business culture.
Which of the following CMO characteristics do you feel are the two most important?