26-74 Which of the following is NOT a factor that may cause the prepayment risk on a pool of mortgages to differ from the PSA's assumed pattern?
A)The age of the mortgage pool.
B)Geographic location.
C)Seasons in the year in which the mortgage was originated.
D)Full or partial amortization of the payments.
E)Assumability of mortgages in the pool.

Question

Quizplus · Accepted Answer

The PSA assumes a constant prepayment rate throughout the year, regardless of the season in which the mortgages were originated. Therefore, the seasons in which the mortgages were originated do not affect the prepayment risk. The other factors listed, such as the age of the mortgage pool, geographic location, full or partial amortization, and assumability of mortgages, can all have an impact on prepayment risk.

26-74 Which of the Following Is NOT a Factor That