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In order to prioritize investors in the more senior classes over the investors in subordinate classes, the senior/ subordinate bond valuation structure is one of the popular solutions. It’s a safe form for securities that are mortgage-backed. It creates different classes of securities and bonds to facilitate investors. The investors in the lower or sub ordinate class suffer the losses on the loans first. On the contrary, typical senior securities get prepaid principal even in the worst cases. Moreover, depending on individual credit risk capacity, senior securities receive the highest credit ratings and thereby yield lower value to investors. On the other hand, the subordinate investors are rated lower and they yield higher value to their investors. There are few reliable bond valuation tools offered by expert analytics service providers. This bond valuation model is one of the most trusted one available to you. This valuation provides values mortgage deals strategically and then their associated mortgage residuals. One of biggest strength of this tool or structure is its integration with mortgage portfolio database. This database is extensively used at the time of performing mortgage bond valuation. In the senior sub tool, the loan valuation, prepayment and default settings are used to value mortgage loans. There is no need repeat mortgage portfolio in order to value mortgage securities or mortgage residuals. This is so because a mortgage portfolio can be used as collateral. Some features of this model- This brings more flexibility that helps and supports deals which are of greater complexity. The features of the structure includes- • Amortizing swaps and caps • NIM (net interest margin) bond support • IO (interest only) bonds support • Collateral groups support: ability to map collateral to specific class groups • Lock-out bond support What’s more on the offer? • Help for creating and modifying any trigger events. • Senior Increasing percentage. • Reverse turbo rules for subordinate classes • Ability to adjust pre step-down and step-down OC target levels • Pro rata principal distribution • Cross-collateralization support • Target percentage for subordinate classes • Cash Account support • Net WAC cap support • Ability to direct prepay penalty cash flows to various parties such as servicer or residual holder One mortgage valuation model offered by a reliable solution provider gives you a better understanding of mortgage valuation. Bond Valuation is no exception. Choose a right model along with experts and get the best deals available in the market.
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