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GLOSSARY
Collateralized mortgage obligation - CMO
A collateralized mortgage obligation, or CMO, is a type of mortgage-backed security. The defining feature of a CMO is its tranche structure that minimizes prepayment risk for at least one class of investors. For example, a CMO might be issued in three tranches called Class A, B, and C. As the underlying mortgages are paid off (usually refinanced) prior to maturity, Class C investors would be paid out first, followed by Class B investors. Since Class A investors are the last to be paid, they assume the least amount of prepayment risk. The pricing of each CMO tranche or class reflects the corresponding risk level.
Collaterized loan obligation
A CLO, or collateralized loan obligation, is a debt security that's securitized by a pool of commercial loans. CLOs are commonly structured in tranches, which allows prepayment risk to be minimized for at least one class of investors. For example, a CLO might be issued in three tranches called Class A, B, and C. As the underlying loans are paid off prior to maturity, Class C investors would be paid out first, followed by Class B investors. Since Class A investors are the last to be paid, they assume the least amount of prepayment risk. The pricing of each CLO tranche or class reflects the corresponding risk level.
Collection
When a borrower lags behing in his loan payment, the lender contacts him in an attempt to bring the delinquent mortgage current which then goes to 'collection'. The efforts to file and mail the necessary documents and notices in the eventuality of a foreclosure of the property is called collection.
Collection agency
A collection agency is an entity that's in the business of collecting delinquent accounts on behalf of lenders, businesses, or individuals.
Collection float
Collection float refers to the time between when a check is deposited, and when the associated funds are available for withdrawal. In investing, collection float refers to the quantity of shares outstanding and available for public trading.
Collusion
Collusion is a secret plan, devised and agreed on by two or more people, to commit fraud.
Comaker
A comaker, also called a cosigner, is one who assumes full responsibility for a debt if the borrower does not or cannot repay the obligation as promised. Comakers document their acceptance of this responsibility by signing the promissory note.
Combination loan
A combination loan is an arrangement between a lender and borrower to make two separate, but related, loans. As an example, if a property owner wishes to build a home, she could negotiate a construction loan and mortgage loan simultaneously. The construction loan covers the construction costs only; once the home is built, the mortgage loan is funded and used to pay off the construction loan. Another example is the arrangement of two loans for a home purchase; one loan funds the down payment, and a second loan funds the remaining purchase price of the home.
Combined loan-to-value ratio
Combined loan-to-value ratio, or CLTV, is a borrower's total mortgage debt outstanding divided by the value of the mortgaged property. Total mortgage debt outstanding includes unpaid balances under first and second mortgages. CLTV is expressed as a percentage.
Combined loan-to-value ratio - CLTV ratio
CLTV, or combined loan-to-value ratio, is a borrower's total mortgage debt outstanding divided by the value of the mortgaged property. Total mortgage debt outstanding includes unpaid balances under first and second mortgages. CLTV is expressed as a percentage.
Commercial bank
A commercial bank is an institution that provides financial services such as deposit accounts, credit cards, loans, and lines of credit. The term might be used to differentiate a traditional bank from an investment bank. It can also be used to describe a banking institution that mainly serves businesses.
Commercial credit
Commercial credit is an approved debt facility that allows a business to borrow funds and repay them at a later date.
Commercial finance
Commercial finance is the practice of making and servicing loans to businesses. Such loans may or may not be secured by certain business assets.
Commercial lending
Commercial lending is the practice of making and servicing loans to businesses. Such loans may or may not be secured by certain business assets.
Commercial loan
A commercial loan is an extension of debt provided by a financial institution to a business. The term generally implies a long-term debt, most commonly used for business start-up, expansion, or recapitalization. Other types of commercial debt available include lines of credit, revolving credit facilities, commercial mortgage loans, and commercial bridge financing.