Business and Personal Finance Dictionary

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• RESIDUAL
  
  1. For sequential-pay CMO structures, a residual tranche is the CMO tranche that receives the excess cash flow that remains after all of the payments due to the holders of other tranches and all of the administrative expenses have been met. When the residual is an accrual bond, it is often called a Z tranche or a Z bond. 2. In REMIC CMO structures, one class of each issue must be designated as the residual for tax purposes. Some REMIC residuals do not meet the traditional definition of a residual as the last tranche to be retired.
  
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