Mortgage pools that are assumed to prepay at a rate of speed that is more rapid than the PSA model would indicate, are said to prepay at less than 100 percent PSA behavior because the mortgage life and balance will exist for a longer time.

Question

Quizplus · Accepted Answer

If the mortgage pool prepay rate is more rapid than the PSA model, it is said to prepay at greater than 100 percent PSA behavior, not less than 100 percent. This is because the mortgages will be paid off sooner than expected, resulting in a shorter remaining life and balance.

Mortgage Pools That Are Assumed to Prepay at a Rate