BOA originates 15 Fully Amortizing Fixed Rate non-recourse Mortgages, each has a $120 balance, 12% interest rate (no fees), 2-year term, and annual payments. BOA immediately issues IO and PO strips backed by the pool of these mortgages and sells them to investors who discount payoffs at 5%.

Back to the original question without prepayment or default, assume that instead of selling the mortgages immediately, BOA sells them in one year. What is BOAs IRR from this deal (originate mortgages at t=0 and sell at t=1)? Note that BOA collects the first mortgage payment, so it sells just the one remaining payment