Prepayment Methods

Prepayment methods determine how prepayments are calculated.

The following are the four types of prepayment methods used in the Forecasting module:

• SMM (Single Monthly Mortality) - A prepayment rate expressed as a monthly rate.
• PSA (Public Securities Association) - A methodology where the amount being prepaid each month changes with the average age of the loan or portfolio.
• CPR (Constant Prepayment Rate) - A methodology that assumes a constant portion of the outstanding loan portfolio prepays each month.
• % of Total Balance - A methodology that uses the total maturity amount for the current month to calculate prepayment amounts in all other time frames.