A mortgage-backed security has been divided into three classes or tranches as follows:

Tranche Ⅰ receives net interest and all the principal payments until it is completely paid off.

Tranche Ⅱ receives its share of net interest and starts receiving all the principal repayments after

Tranche Ⅰ has been completely paid off. Prior to that, it only receives interest payments.

Tranche Ⅲ receives monthly net interest and starts receiving all principal repayments after

Tranches Ⅰ and Ⅱ have been completely paid off. Prior to that, it only receives interest payments.