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Pass-through security

Most commonly, a share in a pool of mortgages. The pooled mortgages payments are passed through to the shareholders in the pool.

From the Financial Dictionary:

“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.”

From Investopedia

“A pool of fixed-income securities backed by a package of assets. A servicing intermediary collects the monthly payments from issuers, and, after deducting a fee, remits or passes them through to the holders of the pass-through security.

Also known as a “pass-through certificate” or “pay-through security.” …

The most common type of pass-through is a mortgage-backed certificate, where homeowners' payments pass from the original bank through a government agency or investment bank to investors.”