Companion Tranche

A CMO tranche that absorbs a higher level of the impact of collateral prepayment variability in order to stabilize the principal payment schedule for a PAC or TAC tranche in the same offering.

Remarks: CMO - Collateralized Mortgage Obligations - also known as Real Estate Mortgage Investment Conduits (REMICs) - are one of the most innovative investment vehicles available today, offering regular payments, relative safety, and notable yield advantages over other fixed-income securities of comparable credit quality.