A pass through certificate (PTC) is a certificate that is given to an investor against certain mortgaged-backed securities that lie with the issuer.
The certificate can be compared to securities (like bonds and debentures) that may be issued by banks and other companies to investors.
When an investor buys these debt instruments, the investor is given a PTC.
Rather, when the original lender recovers money from the original borrower (as interest or otherwise), it is then passed on to the SPV, which then disburses it to the investor in the form of a fixed income.
In a pass through certificate, interest earned on the receivable is directly passed to the holders, whereas, in a pay through certificate, interest received from the receivables is not passed to the holder of the unit.
The certificate can be compared to securities (like bonds and debentures) that may be issued by banks and other companies to investors.
When an investor buys these debt instruments, the investor is given a PTC.
Rather, when the original lender recovers money from the original borrower (as interest or otherwise), it is then passed on to the SPV, which then disburses it to the investor in the form of a fixed income.
In a pass through certificate, interest earned on the receivable is directly passed to the holders, whereas, in a pay through certificate, interest received from the receivables is not passed to the holder of the unit.
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