[Verse 1] Sarah bought a house, got a mortgage loan Bank said "we'll slice this debt, make it our own" Took a thousand mortgages, mixed them in a bowl CMO was born from this financial roll [Chorus] Sequential pays first, PAC in the middle Support takes the heat when prepayments fiddle Three tranches dancing, risk gets rearranged CMO magic, how the game is changed S-P-S, remember this code Sequential, PAC, Support down the road [Verse 2] Sequential tranche waits at the front door Gets every payment till there ain't no more Like a waterfall cascading down First bucket fills before the next comes around [Chorus] Sequential pays first, PAC in the middle Support takes the heat when prepayments fiddle Three tranches dancing, risk gets rearranged CMO magic, how the game is changed S-P-S, remember this code Sequential, PAC, Support down the road [Verse 3] PAC class investors want stability Planned amortization, sweet predictability Upper and lower bounds keep payments steady Like shock absorbers when markets get unready [Bridge] When rates drop fast and homeowners refinance Support tranche suffers, takes the avalanche Shields the PAC holders from prepayment pain While sequential marches in its orderly chain [Verse 4] Three-piece puzzle redistributes fate Early payments, who will take the weight? CMO architects engineer the flow Customized risk for each investor's goal [Chorus] Sequential pays first, PAC in the middle Support takes the heat when prepayments fiddle Three tranches dancing, risk gets rearranged CMO magic, how the game is changed S-P-S, remember this code Sequential, PAC, Support down the road [Outro] Mortgage securities just got redesigned CMO tranches for every investor's mind
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