Assume that a pool of mortgages with aggregate par value of $500 million is used as collateral for an asset backed security. The weighted average coupon on the mortgages is 8.1% and the pass-through coupon rate is 7.2%.

1. Assume in addition to the interest payment you calculated in ( above, scheduled principal payment of $20 million and additional principal prepayment of $15 million is made during the month. Prepare a schedule to show all the disbursements to the four tranches.
2. Assume immediately after the disbursements above, there are defaults in the mortgages and the pool repossessed and sold the underlying properties to realize a net cash flow of $250 million. How should that be distributed to the tranches?