Standard Prepayment Model of the Bond Market Association:
A model based on historical mortgage prepayment rates that is used to estimate prepayment rates on mortgage securities. The Association's model is based on the Constant Prepayment Rate (CPR) which annualizes the Single Monthly Mortality (SMM) or the amount of outstanding principal that is prepaid in a month. Projected and historical prepayment rates are often expressed as “percentage of PSA” (Prepayment Speed Assumptions). A prepayment rate of 100% PSA implies annualized prepayment rates of 0.2% CPR in the first month 0.4% CPR in the second month 0.6% CPR in the third month and 0.2% increases in every month thereafter until the thirtieth month when the rate reaches 6%. From the thirtieth month until the mortgage loan reaches maturity 100% PSA equals 6% CPR. Super PO A principal-only security structured as a companion bond.