PSA Prepayment Model
Definition
A schedule endorsed by the Public Securities Association used to estimate the rate of prepayment associated with mortgage-backed securities over time. The prepayment of excess mortgage principal is calculated using an increasing rate over a 30-month period then a constant rate thereafter. The standard model, referred to as 100% repayment, assumes a 0.2% increase each month for 30 months followed by 6% thereafter.
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