as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
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collateralized mortgage obligations
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i think the definition of overcollateralization on investopedia will answer this question for you.  namely this part: for example, in the case of a mortgage backed security, the principal amount of an issue may be $100 million while the principal value of the mortgages underlying the issue may be equal to $120 million. the bond is packed with more mortgages than the face value indicates.  it's effectively sold at a discount to underlying value.
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