The Green Mortgage Company has originated a pool containing 75 ten-year fixed interest rate mortgages with an average balance of $100,600 each. All mortgages in the pool carry a coupon of 12 percent. (For simplicity, assume that all mortgage payments are made annually at 12% interest.) Green would now like to sell the pool to FNMA.

Required:

c. Instead of selling the pool of mortgages in (a), Green decides to securitize the mortgages by issuing 100 pass-through securities. The coupon rate will be 11.5 percent and the servicing and guarantee fee will be 0.5 percent. However, the current market rate of return is now 9.5 percent. How much will Green obtain for this offering of MPTs? What will each purchaser pay for an MPT security, assuming the same prepayment rate as in (a)?

d. Assume now that immediately after purchase in (c), interest rates fall to 8 percent and that the prepayment rates are expected to accelerate to 20 percent per year, beginning at the end of the first year. What will the MPT security be worth now?

Answer is not complete. Complete this question by entering your answers in the tabs below. Instead of selling the pool of mortgages in (a), Green decides to securitize the mortgages by issuing 100 pass-through securities. The coupon rate will be 11.5 percent and the servicing and guarantee fee will be 0.5 percent. However, the current market rate of return is now 9.5 percent. How much will Green obtain for this offering of MPTs? What will each purchaser pay for an MPT security, assuming the same prepayment rate as in (a)? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Answer is not complete. Complete this question by entering your answers in the tabs below. Assume now that immediately after purchase in (c), interest rates fall to 8 percent and that the prepayment rates are expected to accelerate to 20 percent per year, beginning at the end of the first year. What will the MPT security be worth now? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)