Question: I need help with Question 7 not 6 QUESTION 6 Consider a sequential pay CMO that is backed by 100 mortgages with average balance of
QUESTION 6 Consider a sequential pay CMO that is backed by 100 mortgages with average balance of $150,000 each. The mortgages have monthly payments with WAM - 30 years and WAC -6%. There is a servicing fee of 64% and prepayment is according to 150W PSA. Tranche A holds 56,000,000 of the mortgage pool principal at origination, tranche Bholds $3,000,000 and tranche 2 holds $5,000,000. The rest of the pool principal is held by the SPV as a residual. The SPV has set a pass through rate (coupon rate net of the servicer/guarantee fee) of 4% for Tranche A 4.5 for Tranche Band 5% for Tranche 2 What is tranche A's outstanding principal balance at the end of the first month (beginning of the second month? 5960478.92 QUESTION 7 Using the same CMO as in the prior question, what is the cash flow to the residual tranche in month 17
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