Prepayment speed

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Prepayment speed

Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities.

Prepayment Speed

In mortgage-backed securities, the estimated rate at which mortgage borrowers will pay off the mortgages that underlie an MBS. The equivalent of the coupon on a mortgage-backed security is a percentage of the interest and principal paid on the mortgages backing the security. A risk associated with mortgage-backed securities is that too many homeowners will pay off their mortgages with too much prepayment speed, depriving the holders of the MBS from future coupon payments.
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Given the investor concerns about pre-payment speeds, working with FHA to create this trial-modification initiative was clearly in the best interest of borrowers, issuers and investors.
2) Due to the significant reduction in long-term interest rates during the fourth quarter of 2008, the fair value of the Company's mortgage servicing rights declined substantially, as projected pre-payment speeds of the underlying loans increased dramatically.
The premiums described above will be earned in future periods, but may differ materially from the estimated amounts used in determining current adjusted book value due to changes in market interest rates, refinancing or refunding activity, pre-payment speeds, policy changes or terminations, credit defaults, and other factors that management cannot control or predict.
Estimated future premiums may change from period to period due to changes in par outstanding, maturity or other factors that management cannot control or predict that result from market interest rates, refinancing or refunding activity, pre-payment speeds, policy changes or terminations, credit defaults, or other factors.
These factors include, but are not limited to, changes in interest rates, increased costs of borrowing, decreased interest spreads, changes in mortgage pre-payment speeds, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political, regulatory and market conditions.
Muller Data/TSIS will utilize FactorCast to deliver not only its own securities data, but also several FinPub value-added data elements, including generic level and pool-specific pre-payment speeds for MBSs and ARMs.
Muller Data/TSIS can now create value-added data fields, such as CPR (Constant Pre-Payment Rate) and PSA (Public Securities Association) pre-payment speeds for inclusion in their standard product offerings.
These factors include, but are not limited to, the effect of demand for public offerings, activity in the secondary securities markets, interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions.

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