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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Collateralized Mortgage Obligation

Definition:

A bunch of mortgages are packaged together. The package pays interest, which comes in from Joe Sixpack's mortgage payments. The package pays distributions based on when various tranches of the mortgages come due. CMOs are complex - kids, don't try this at home. Actually, given that the subprime meltdown was precipitated by these beasts, maybe it would have been a good idea if the professionals hadn't tried it, either.

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