Question
A Bank originates a pool of 500 30-year mortgages, each averaging $150,000 with an annual mortgage coupon rate of 8%. The GNMA credit risk insurance
A Bank originates a pool of 500 30-year mortgages, each averaging $150,000 with an annual mortgage coupon rate of 8%. The GNMA credit risk insurance fee is 6 basis points and the banks servicing fee is 19 basis points.
1. What is the monthly mortgage payment?
2. What are the expected monthly cash flows to bondholders?
3. What are the expected monthly cash flows for the Bank and GNMA?
Textbook: Fundamentals of Futures and Options by Jon C. Hull, 2017
Pearson Publishing, ISBN: 9780134083247
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Banking And Finance
Authors: Brian Duignan
1st Edition
1615308946, 978-1615308941
