A collateralized mortage obligation (CMO) that is issued by a government agency or a government-sponsored enterprise. Speicifically, the agency or enterprise issues securities backed by the underlying mortgages of the CMOs. Examples of such agencies (in the US) include Fannie Mae and Ginnie Mae.

Agency CMOs are structured in a way that the interest payment and principal repayment from the collateral will be sufficient to settle the interest obligation and repay the par value of each and every tranche.