Asset-backed pass-through securities are debt obligations backed by a pool of mortgages.

• A. Debt obligations backed by a pool of mortgages
• B. Corporate bonds backed by real estate
• C. Municipal bonds backed by taxes
• D. Government securities backed by the full faith and credit

Answer: (A)

Asset-backed pass-throughs work by pooling various underlying assets and passing the collected payments (principal and interest) through to investors, after servicing fees. When the pool consists of mortgages, the resulting security is a mortgage-backed security, which is exactly what you’re describing. So the statement is true because the cash flows come from a pool of mortgages and are delivered to investors as a pass-through.

The other structures describe different kinds of debt. A corporate bond secured by real estate signals a corporate loan backed by collateral but not the same pass-through flow of mortgage payments from a pool. Municipal bonds backed by taxes rely on tax revenues for repayment, not a mortgage asset pool. Government securities backed by the full faith and credit rely on the government’s guarantee, not on a pool of underlying assets like mortgages.