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Fixed-rate level-payment mortgage pass-through security

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Reference no: EM132903340

Lecture 8 - Mortgages and MBS

Consider the following fixed-rate level-payment mortgage pass-through security:

Total principal outstanding = $5,000,000

Weighted average mortgage (Note) rate = 8.25%

Weighted average remaining maturity = 30 years (360 months)

Pass-through rate=7.5%

a. What is the scheduled monthly mortgage payment if there is no prepayment?

b. Assume that you are an investor in the pass-through security. Assume 150 PSA pre-payment. Calculate the interest and scheduled principal repayment received by you for the sixthmonth.

c. What is the amount of prepayment in the sixthmonth?

Reference no: EM132903340

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