Net interest margin securities
Net interest margin securities (or NIMS) is a type of
financial instrumentrelated to a securitization.
New Century Financial Corporation-- the subprime mortgagelender that went into Chapter 11 bankruptcyin April 2007 -- sells the cash flows it receives from its mortgages in what is known as a mortgage backed security(which is basically a bundled set of loans that is sold to investors -- similar to a bond). Any excess cash flows derived from the mortgage receivable (after the investors of the mortgage backed security have been paid) is referred to as the "residual interest in securitizations" or just "residual." A NIMS is the sale of those residuals.
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