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Questions and Answers
What does the burn-out factor represent?
What does the burn-out factor represent?
- The percentage of the mortgage pool that will be paid after the month under consideration
- The percentage of the mortgage pool that has been prepaid prior to the month under consideration
- The percentage of the mortgage pool that has been prepaid prior to the sale of the loan (correct)
- The percentage of the mortgage pool that has defaulted
When calculating the burn-out factor, what does 'prepaid' refer to?
When calculating the burn-out factor, what does 'prepaid' refer to?
- Payments made before the month under consideration (correct)
- Payments made after the month under consideration
- Payments made by defaulting borrowers
- Payments that will be made in the future
Which scenario would increase the burn-out factor?
Which scenario would increase the burn-out factor?
- An increase in defaults by borrowers
- A decrease in prepayments before the sale of the loan
- A decrease in payments after the month under consideration
- An increase in payments before the month under consideration (correct)
What is NOT a component of the burn-out factor?
What is NOT a component of the burn-out factor?
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In a mortgage pool with a high burn-out factor, what inference can be made about prepayments?
In a mortgage pool with a high burn-out factor, what inference can be made about prepayments?
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