On October 1, 2005, Fannie Mae issued a mortgage pass through security and the prospectus supplement stated the following FANNIE MAE MORTGAGE BACKED SECURITIES PROGRAM SUPPLEMENT TO PROSPECTUS DATED JULY 01, 2004 $464,927,576 00 ISSUE DATE OCTOBER 01, 2005 SECURITY DESCRIPTION FNMS 05 0000 CL 844801 5 0000 PERCENT PASS THROUGH RATE FANNIE MAE POOL NUMBER CL 844801 CUSIP 31407YRW1 PRINCIPAL AND INTEREST PAYABLE ON THE 25TH OF EACH MONTH BEGINNING NOVEMBER 25, 2005 POOL STATISTICS SELLER WELLS FARGO BANK, N A SERVICER WELLS FARGO BANK, N A NUMBER OF MORTGAGE LOANS 1986 AVERAGE LOAN SIZE $234,312 06 MATURITY DATE 10 01 2035 WEIGHTED AVERAGE COUPON RATE 5 7500 WEIGHTED AVERAGE LOAN AGE 1 mo WEIGHTED AVERAGE LOAN TERM 360 mo WEIGHTED AVERAGE REMAINING MATURITY 359 mo WEIGHTED AVERAGE LTV 73 WEIGHTED AVERAGE CREDIT SCORE 729 Use the above information to answer the below questions What does the pass through rate of 5 for this security mean What is the average note rate being paid by the borrowers in the loan pool for this security Why does the pass through rate differ from the average note rate paid by the borrowers in the loan pool for this security What is the pool number for this security, and why is the pool number important The maturity date for this security is shown as 10 01 2035 An investor in this security might be concerned about its very long maturity (30 years) Why is the maturity date a misleading measure of the securitys maturity If an investor purchased $15 million principal of this security and, in some month, the cash flow available to be paid to the security holders (after all fees are paid) is $12 million, how much is the investor entitled to receive Every month a pool factor would be reported for this security If the pool factor for some month is 0 92, what is the outstanding mortgage balance for the loan pool for that month

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 21, 2024

On October 1, 2005, Fannie Mae issued a mortgage pass-through security and the prospectus supplement stated the following:

FANNIE MAE
MORTGAGE-BACKED SECURITIES PROGRAM
SUPPLEMENT TO PROSPECTUS DATED JULY 01, 2004
$464,927,576.00
ISSUE DATE OCTOBER 01, 2005
SECURITY DESCRIPTION FNMS 05.0000 CL-844801
5.0000 PERCENT PASS-THROUGH RATE
FANNIE MAE POOL NUMBER CL-844801
CUSIP 31407YRW1
PRINCIPAL AND INTEREST PAYABLE ON THE 25TH OF EACH MONTH
BEGINNING NOVEMBER 25, 2005
POOL STATISTICS
SELLER	WELLS FARGO BANK, N.A
SERVICER	WELLS FARGO BANK, N.A
NUMBER OF MORTGAGE LOANS	1986
AVERAGE LOAN SIZE	$234,312.06
MATURITY DATE	10/01/2035
WEIGHTED AVERAGE COUPON RATE	5.7500%
WEIGHTED AVERAGE LOAN AGE	1 mo
WEIGHTED AVERAGE LOAN TERM	360 mo
WEIGHTED AVERAGE REMAINING MATURITY	359 mo
WEIGHTED AVERAGE LTV	73%
WEIGHTED AVERAGE CREDIT SCORE	729

Use the above information to answer the below questions.

What does the pass-through rate of 5% for this security mean?
What is the average note rate being paid by the borrowers in the loan pool for this security?
Why does the pass-through rate differ from the average note rate paid by the borrowers in the loan pool for this security?
What is the pool number for this security, and why is the pool number important?
The maturity date for this security is shown as 10/01/2035. An investor in this security might be concerned about its very long maturity (30 years). Why is the maturity date a misleading measure of the securitys maturity?
If an investor purchased $15 million principal of this security and, in some month, the cash flow available to be paid to the security holders (after all fees are paid) is $12 million, how much is the investor entitled to receive?
Every month a pool factor would be reported for this security. If the pool factor for some month is 0.92, what is the outstanding mortgage balance for the loan pool for that month?