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Given a pool of 30 year fully-amortizing FRMs making monthly payments to investors with the following...

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Finance

Given a pool of 30 year fully-amortizing FRMs making monthlypayments to investors with the following characteristics: WAC: 5%Pass-through rate: 4.5% Prepayment assumption: 300 PSA Loans werenot seasoned before entering pool This MBS has been active for afew years in collecting payments from borrowers and making paymentsto investors. It's currently month 32 in the pool. Starting poolbalance month in month 32: 54,234,988 What is the dollar amount ofprepayment in month 32? CPR is ((300/100)*(0.06*32))/30 = 0.192(notsure about this, that's why I'm asking) Please provide stepby step

Answer & Explanation Solved by verified expert
3.6 Ratings (678 Votes)
As per PSA calculations for 100 PSA the prepayment rises at the rate of 02 of balance amount until it reaches the level of 6 in month 30 and remains stable after that For 300 PSA the prepayment after 30th months would be three time that However since only the principal outstanding after 32 months in given and we do not know the principal amount the solution becomes complex The table below helps reach the figure through iterations The excel calculation with the    See Answer
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Given a pool of 30 year fully-amortizing FRMs making monthlypayments to investors with the following characteristics: WAC: 5%Pass-through rate: 4.5% Prepayment assumption: 300 PSA Loans werenot seasoned before entering pool This MBS has been active for afew years in collecting payments from borrowers and making paymentsto investors. It's currently month 32 in the pool. Starting poolbalance month in month 32: 54,234,988 What is the dollar amount ofprepayment in month 32? CPR is ((300/100)*(0.06*32))/30 = 0.192(notsure about this, that's why I'm asking) Please provide stepby step

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