¹ Securitization is the process that occurs when a firm purchases many mortgages from the originating banks and offers securities to investors that pay returns based on the mortgage payments received.For example, a firm buys $1 million of mortgage receivable that have an average term of 20 years and an average interest rate of 5% for $900,000.Then the firm sells 1000 $1,000-securities that will pay to the investors their proportionate share of the interest revenue received each month on the mortgages.The highest expected payments are $4,167 (.05/12 * $10,000,000 * 1), so someone with a single $10,000 security could receive $4.167 each month for 240 months.Of course, the actual cash received will differ depending on the number of on-time payments and on any mortgage prepayments, etc.

Facts

Mortgage Principal at origination 1/1/2019:$10,000,000

Annual Interest Rate at origination:6%

Term of Mortgage from origination 1/1/2019:20 years

Purchase Price: $10,000,000 on 1/1/2019

The mall owner has stopped paying principal beginning April, 2020, and anticipates being unable to pay even the interest portion beginning September, 2020 unless the CDC allows less strict mask and social distancing requirements.

The mall had a fair market value of $20 million on 1/1/2019, and expects a current appraisal to be at about $16 million.

Ignore refinancing costs.

The securitizations do not qualify for sale accounting, and the creditor retains legal title to the mortgage as well as a 10% participation in the mortgage.

Today is August 31, 2020.

A.Calculate the original mortgage payment (round UP to nearest penny).

B.an amortization table that uses the CONSTANTS / INPUT / PROCESSING / OUTPUT / VISUALIZATION structure from the mortgage origination January 1, 2020 to maturity. (Round interest components UP to the nearest penny.)The last payment on the mortgage will differ from the monthly payment you calculate in (A) and should be calculated within the amortization table.