The financing arrangements consisted essentially of issuances of (1) notes and bonds payable; (2) subordinated debt (capital debentures and zero-coupon bonds); (3) collateralized mortgage obligations
; and (4) guaranteed mortgage certificates.
Collateralized Debt Obligations (CDOs), as they are known, took the basis of their structure from Collateralized Mortgage Obligations
(CMOs) and seek to pool a variety of loans, bonds, mortgages and other assets that can include non-performing loans into a single entity--spreading risk while providing high yields.
New analysis by the Analysis Group/Economics suggests that options can be valued much like mortgages were in the 1980s with the advent of collateralized mortgage obligations
, or CMOs.
The balance of the portfolio was comprised of 57% adjust able rate mortgages and 19% LIBOR floating rate collateralized mortgage obligations
. The company has continued to avoid the introduction of credit risk to its portfolio.
Phillip Luhmann, invested $100 million in collateralized mortgage obligations
in the fall of 1993 after two similar ventures proved financially successful earlier in the year.
The securities, called collateralized mortgage obligations
, are backed by junk-rated mortgages and were held by the New York Fed in a facility called "Maiden Lane III."
These asset-backed securities became known as "collateralized mortgage obligations
" -- CMOs.
Financial institutions originate home mortgages with the intention of exchanging them on the spot or forward market for mortgage backed securities, which are then either held for investment purposes, or sold to financial institutions that use them as collateral for collateralized mortgage obligations
. Leasing companies originate leases and then sell them to a bankruptcy remote subsidiary that in turn sells undivided interests in the leases to a trust in exchange for asset backed securities which are composed of debt and equity interests.
Some define derivatives to include asset-backed securities (such as collateralized mortgage obligations
, interestand principal-only securities, residual securities and stractured notes), which generally are recognized in a user's statement of financial position.
Another important factor has been the development of the market for mortgage-backed securities, especially collateralized mortgage obligations
In this position, Ingram oversees trading of primary and secondary collateralized mortgage obligations
(CMO), secondary asset-backed securities and adjustable-rate mortgages.