comp_sci_kid

Tenten,

That's exactly what PSA is, it's an adjustment factor. Basically it says that prepayments are slower in the early years or months and it adjusts CPR to reflect that fact.

It's logic is this, when you first buy a home you're not going to refinance right away. Who the hell wants to go thru that hassle all over again so soon? Not too many people. Plus you're not going to refinance if int rates haven't declined or your credit hasn't improved. So that's why it takes some time for prepayments to start to speed up over the life of the passthru security