Consider a primary mortgage market lendu is just originated 1.000 30 year, monthly payment loans for $800,000 each at 5.25% interest with each borrower paying 1 point at origination. The lender wishes to sell the pool of mortgages as a mortgage pass through security (MPTS), Investors are demanding a 4.875% yield on the MPTS backed by the pool. A servicing fire is willing to service the loans in the pool for 0.5% annually paid monthly) and the pool is expected prepay based on the 100% PSA prepayment model. What is the market value of the pool? Hint: Don’t reinvent the wheel to answer this question. Look for resources in the Modules that can reduce the time required to calculate the answer Recall that the 100% PSA model assumes that the

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