Home
E-Mail
Latest

PSA Model Financial Glossary

What is it? One of two standard models for describing the rate at which prepayments have been, are, or are expected to be received for mortgages and mortgage-backed securities. The model assumes that borrowers are far less likely to refinance a new mortgage than they are to refinance an older mortgage. Thus the PSA model builds in an assumption of a 30-month phasein or ramp-up of prepayments. After a mortgage or a pool of mortgages is 30 months old, a speed of 100 percent PSA is equal to 6 percent CPR. Similarly, a speed of 200 percent PSA is equal to 12 percent CPR and 50 percent PSA is equal to 3 percent CPR. During the initial 30-month ramp-up, the PSA model assumes much slower speeds. For the first month, 100 percent PSA equals 0.20 percent CPR. In the second month, 100 percent PSA equals 0.40 percent CPR. This level rate of increase continues throughout the 30-month period. PSA is the standard prepayment model of the Bond Market Association, formerly the Public Securities Association. The letters PSA were once an acronym for the former organization name but now stand for prepayment speed assumptions.

Finance Term Definition Added By: Brody

The PSA Model definition has been viewed 2117 Time(s)!




Send To Friends!

If you'd like to send the PSA Model definition to yourself or to your friends/colleagues, just enter the e-mail addresses in the boxes below -





We hope you now understand the meaning of PSA Model. If you need any more information on this term, please don't hesitate to contact us.

Other Similar Finance Terms:

Financial Term Cashflow statement is Summarises cash paid to and received from other organisations and individuals for capital and revenue purposes.

Financial Term Capital Markets is Markets for long-term financial securities.

Financial Term Collection AgencyCA is A third party used to collect on delinquent accounts. Any third party collectors including attorneys are mandated by the Federal Fair Debt Collection Practices Act. This act protects you against abusive collection procedures.

Financial Term Federal Housing Administration (FHA) is An agency, within the U.S. Department of Housing and Urban Development, that administers loan programs, loan guarantee programs, and loan insurance programs designed to make more housing available.

Financial Term Stakeholder pensions is A low cost, flexible type of pension. These meet strict government guidelines, on access, charges and terms.