Pass-Through Security In a pass-through security, debt obligations are purchased by an intermediary who packages them into new securities backed by the pooled obligations and then sells shares in the pool in the open market. The interest and principal payments made by the debtor flow through the intermediary, who pays them to the investor net of service fees. The most common type of pass-through security is a mortgage-backed security, secured by homeowners' mortgages and sometimes guaranteed by the Veteran's Administration, the Farmer's Home Administration, or the Federal Housing Administration.
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