principal and partly used to pay the interest on it. These two components can be separated to create SMBS's, of which there are two subtypes: An interest-only stripped mortgage-backed security (IO) is a bond with cash flows backed by the interest component of property owner's mortgage payments. A net interest margin security (NIMS) is re-securitized residual interest of a mortgage-backed security A principal-only stripped mortgage-backed security (PO) is a bond with cash flows backed by the principal repayment component of property owner's mortgage payments. There are a variety of underlying mortgage classifications in the pool: Prime mortgages are conforming mortgages with prime borrowers, full documentation (such as verification of income and assets), strong credit scores, etc. Alt-A mortgages are an ill-defined category, generally prime borrowers but non-conforming in some way, often lower documentation (or in some other way: vacation home, etc.) Alt-A mortgages tend to be larger in size than subprime loans and have significantly higher credit quality. For example, an Alt-A loan might be to an individual with multiple and varying sources of income; non-owner occupied, investment properties are often Alt-A loans. Because Alt-A loans are not conforming loans, they are not eligible for purchase by Fannie Mae or Freddie Mac. Subprime mortgages generally have weaker credit scores as well as little to no verification of income or assets, high debt-to-income ratios, etc. Jumbo mortgage when the size of the loan is bigger than the "conforming loan amount" as set by Fannie Mae or Freddie Mac. As such, the mortgage rates on jumbo loans are somewhat higher than for conforming loans. These types are not limited to Mortgage Backed Securities. Bonds backed by mortgages but that are not MBSs can also have these subtypes. There are two types of classifications based on the issuer of the security: Agency, or government, issued securities by government-sponsored enterprise issuers, such as Fannie Mae, Freddie Mac, and Ginnie Mae. Fannie Mae and Freddie Mac sell short term (3–6 month) bills at auction on a weekly schedule, and longer-term (1–10 year) notes at monthly auctions. The underlying mortgages for Agency MBS are one to four-single family residential mortgages only. Non-agency, or private-label, securities by non-governmental issuers, such as trusts and other special purpose entities like real estate mortgage investment conduits. The underlying mortgages for Non-Agency MBS are backed by second mortgage loans, manufactured housing loans, and a variety of commercial real estate loans, in