CMO, or Collateralized Mortgage Obligation, is a type of mortgage-backed security that pools together a large number of mortgages and issues several classes or tranches with varying degrees of risk and returns.
A collateralized mortgage obligation (CMO) is a type of security backed by a pool of mortgage loans that are structured into different classes, each with distinct maturities. CMOs, often using Real Estate Mortgage Investment Conduits (REMICs) as a standard investment vehicle, provide investors with specified periodic interest and principal payments.
