A type of Mortgage-Backed Securities that separates the principal and interest payments from the underlying mortgages into tranches (slices), each with a different rate of interest, repayment schedule, and priority level. Examples include:

  • Planned Amortization Class (PAC)
  • Targeted Amortization Class (TAC)
  • Companion/Support Bonds
  • Z-Tranches
  • Principal Only (PO) Securities
  • Interest Only (IO) Securities
  • Floating-Rate Tranches