Originally Posted by hardworkahead
What is the primary difference between MBS and CMO? Is CMO a type of MBS?
Yeah.... check out the charts on 566-569 of Fabozzi, dawg.
You've got your mortgages... they are converted into MBS's of three varieties... ya got your basic passthrough securities of course... but no these weren't sophisticated enough for investors... they demanded more... so Collateralized Mortgage Obligations (CMO's) were created (now comprising 40% of MBS market). More specialized still, you've got your third flavor of MBS... Stripped MBS's!!!!