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The Mini Fannie just acquired a pool of 100 mortgages with average balance of $250,000 per loan. All loans in the pool are constant payment
The Mini Fannie just acquired a pool of 100 mortgages with average balance of $250,000 per loan. All loans in the pool are constant payment mortgage with 7.5% interest rate, 5-year term, and annual payment. Mini Fannie is going to issue 25,000 shares of mortgage pass-through securities with this pool, which pass-through pays investor once a year. Assuming there is no servicing fee, but expect a constant prepayment rate of 10% of the beginning balance each year except the year)what is the total cash flow to investor in year 1?
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