SMBS

Overview

Stripped mortgage-backed securities (SMBS) are multiclass, pass-through, grantor trust securities created by "stripping apart" the principal and interest payments from the underlying mortgage-related collateral into two or more classes of securities. The securities so created address two distinct investment needs. SMBS deals create one or more classes of securities:

  • Interest Only (IO) classes receive the interest cash flow from the underlying assets.
  • Principal Only (PO) classes receive the principal cash flow from the underlying assets.
  • Additional classes that may receive different portions of principal and interest.

Most SMBS can be recombined at a future date and are commonly identified by a trust number and class (e.g., SMBS Trust 318, and class 1 or 2).

In another type of SMBS transaction, excess servicing is stripped from base servicing on loans backing Fannie Mae MBS and issued solely as interest-only (IO) bonds.

Additional Information

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For Multifamily securities, access disclosure data, including at-issuance and monthly data, Legal documents, consumable data files and search capabilities for MBS, Megas, and REMICs. Click here to access.

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Page last revised: 12/16/20

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