Which of the following are reasons that the actual prepayment rate on a specific mortgage pool backing a specific pass-through security may differ from PSA's assumed pattern?
A)age of the mortgage pool and the size of the pool
B)geographic location and assumability of mortgages in the pool
C)age and job status of mortgagees in the pool
D)level of the pool's coupon relative to the current mortgage coupon rate
E)all of the above are reasons

Question

Quizplus · Accepted Answer

All of the factors listed can impact the prepayment rate on a specific mortgage pool and could cause it to vary from PSA's assumed pattern. The age and size of the pool could impact the likelihood of prepayment, while geographic location and assumability could affect the level of demand for the mortgages in the pool. The age and job status of mortgagees could also impact their ability and willingness to prepay their mortgages. Finally, the level of the pool's coupon relative to the current mortgage coupon rate could impact the attractiveness of the mortgages in the pool to potential refinancers.

Which of the Following Are Reasons That the Actual Prepayment