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Public Securities Association Standard Prepayment Model - PSA
What does it mean?
An assumed monthly rate of prepayment that is annualized to the outstanding principal balance of a mortgage loan.
In Other Words...
The PSA model acknowledges that prepayment assumptions will change during the life of the obligation and affect the yield of the security. An indicator of 100% implies that the rate will increase monthly by 0.2%, whereas an indicator of 0% implies no monthly changes of the prepayment rate.
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Related Terms
CMO | Contraction Risk | Extension Risk | Ginnie Mae | Mortgage | Prepayment Risk | Yield
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