In: Finance
explain the general difference(s) between residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities with respect to the underlying collateral (physical real estate, not the loans).
Commercial mortgage back securities are the fixed income securities that have collateral as commercial properties, not residential properties which are in the case of RMBS.
Commercial properties include - apartments, office, hotels, schools, hospitals, etc which can accommodate multiple families
Residential properties include - single, two or four-family real estate
Commercial mortgage back securities also vary from RBMS by having less pre-payment risk in comparison to RMBS because the terms on CMBS are fixed.