Question:

What is the Prospectus Prepayment Curve?

Answer:

The Prospectus or Pricing Prepayment Curve (PPC) is used to measure the pricing speed of a transaction. It is usually applicable to home equity loans (HELs). The PPC is a convention used by investors in asset-backed securities (ABSs) in attempt to predict prepayment behavior of certain loan pools.

Since the ABS market has existed since 1980 only, any prepayment models and conventions are supposed to evolve further.

Other Prepayments Curves and Conventions in the ABS Market

The Manufactured Housing Prepayment Curve (MHP) applies particularly to the manufactured home loans sector.

The Home Equity Prepayment Curve (HEP) ranges from 0 to 100 and is used as a prepayment scale for HELs.

The Constant Prepayment Rate (CPR) is used to measure prepayment levels for mortgage loans, but also HELs.

The Monthly Payment Rate (MPR) is used for credit card receivables and other nonamortizing assets. Those ABS securities are required to have a minimum MPR. When the min MPR is reached, the ABS issue will begin early amortization.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: