- pass-through
- The original type of MBS structure. In a pass-through, investors own a pro rata claim to the cash flows from the pool of underlying mortgages. Each investor's pro rata share of interest and principal is remitted to the investor, "passed through," by an agent. American Banker Glossary
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pass-through ˈpass-through noun [countable, uncountable]1. FINANCE an arrangement where payments on particular home loans are sent by the lender to a financial institution that has sold Mortgage-Backed Securities based on these loans. Mortgage-backed securities are bonds where interest payments on loans are used to pay interest to investors who have bought the bonds, and to repay the bonds when they mature (= reach the time when they must be repaid):• $200 million of mortgage pass-through certificates (= bonds ) was underwritten by Shearson Lehman Hutton Inc.
• the price pass-through for gasoline
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pass-through UK US noun► [C or U] (also pass-along) COMMERCE an increase in the price a customer pays because of an increase in a company's costs: »Despite the increased price of raw materials, we want to avoid pass-through or we risk losing customers.
► [C] (also pass-through security) FINANCE an arrangement in which a financial organization buys loans from a bank and sells bonds representing these loans to investors. The payments on the loans are then used to pay interest to the investors and pay back the bonds: »A trader of 30-year pass-throughs said volume for the day at his firm was about $50 million.
Financial and business terms. 2012.