What does Sequential pay CMO mean？

Sequential pay CMO (Collateralized Mortgage Obligation) is a type of mortgage-backed security where the principal and interest payments from a pool of mortgages are divided into multiple tranches, or slices, with different maturities. The tranches are paid in a sequential order, with the shortest-term tranche receiving payments first, followed by the next shortest, and so on until all tranches have received their payments. This structure allows investors to choose the level of risk and return that suits their investment objectives. The sequential pay CMO is a popular investment tool for institutional investors seeking to diversify their portfolios and manage risk.