Pool factor

Pool factor

In finance, a pool factor is a number expressed as a factor of one that is used to indicate the remaining principal balance of a note. Pool factors are only used to describe specific classes of securities, namely pooled ABSs and MBSs whose component payments are returned to investors on a monthly basis [http://www.investopedia.com/terms/p/poolfactor.asp Investopedia:Pool Factor] . Pool factors are published monthly for Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities [http://www.forbes.com/tools/glossary/search.jhtml?term=pool_factor Forbes Financial Glossary: Pool Factor] .

To calculate the pool factor,
:{Outstanding Principal Balanceover Original Principal Balance} = {Pool Factor}
For example, a pool factor of 0.523 indicates that for each note of $10,000, $4,770 of principal has been repaid.

Usage

Asset backed securities and MBSs typically contain issue terms that specify a method through which redeeming principal is shared among investors. When redemption is done pro-rata, a pool factor is useful to investors in cases of early repayment. Early repayment reduces the amount of collateral available for an issue, and therefore some of the outstanding principal is returned to investors as stated in the issue terms. In this case, the pool factor is used to indicate how the remaining outstanding principal is adequately securitized [Choudhry, Moorad, et al. "Capital Market Instruments: Analysis and Valuation". Prentice Hall, 2002. Pg 183. ISBN 0-273-65412-8.] .

References


Wikimedia Foundation. 2010.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Pool Factor — The percentage of the original principal that is left to be distributed in a mortgage backed security, as represented by a numerical factor that will be attached on periodic market quotes and other presentations of the MBS’s price.… …   Investment dictionary

  • pool factor — See factor. American Banker Glossary The outstanding principal balance divided by the original principal balance with the result expressed as a decimal. pool factors are published monthly by the Bond Buyer newspaper for Ginnie Mae, Fannie Mae,… …   Financial and business terms

  • Pool factor — The outstanding principal balance divided by the original principal balance with the result expressed as a decimal. Pool factors are published monthly by the Bond Buyer newspaper for Ginnie Mae, Fannie Mae, and Freddie Mac( Federal Home Loan… …   Financial and business terms

  • Pool Factor — (коэффициент пула) доля совокупной суммы основного долга по пулу активов, которая остается непогашенной на конкретную дату …   Ипотека. Словарь терминов

  • Pool safety camera — Pool Safety Cameras are video monitoring systems designed to reduce drowning deaths in public and private pools. Contents 1 Classification 2 Viewing aids 3 Remote monitoring 4 …   Wikipedia

  • Pool chlorine hypothesis — The pool chlorine hypothesis is the hypothesis that long term attendance at indoor chlorinated swimming pools by children up to the age of about 6 7 years is a major factor in the rise of asthma in rich countries since the late twentieth century …   Wikipedia

  • factor — (1) The percent of the original face of an MBS pool that remains outstanding at any given time is called the current factor. Principal payments, made by the borrowers, reduce the original face every month. Thus there is a new current factor each… …   Financial and business terms

  • Pool of Radiance — Infobox VG| title = Pool of Radiance developer = Strategic Simulations, Inc. publisher = Strategic Simulations, Inc. designer = engine = Gold Box released = genre = Role playing game, Tactical RPG modes = Single player ratings = platforms = Amiga …   Wikipedia

  • Reported factor — The pool factor as reported by the bond buyer for a given amortization period. The New York Times Financial Glossary …   Financial and business terms

  • Amortization factor — The pool factor implied by the scheduled amortization assuming no prepayemts. The New York Times Financial Glossary …   Financial and business terms

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”