CMO

Definition

Collateralized Mortgage Obligation: mortgage-backed securities bundled with other mortgages and sold to investors. These were the 2008 financial crisis's greatest hits album.

Example Usage

The investment bank securitized 1,000 mortgages into a $400M CMO.

Origin

Investment banking innovation from the 1980s

Fun Fact

Rating agencies gave many CMOs AAA ratings before 2008, then they all imploded spectacularly when housing prices fell.

Source: Securities Industry and Financial Markets Association

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