Repayment profile

The repayment profile of a mortgage can take one of two basic forms (1) a capital repayment loan, where the borrower makes regular payments consisting of the interest due and a portion of the capital outstanding so the loan is repaid in full at maturity, or (2) an interest-only loan, where the capital must be paid in full on the maturity date of the mortgage. Repayment mortgages are often constant payment amortising loans but in certain markets linear amortisation is the norm. 

Mortgage master trusts require the seller to maintain a certain minimum interest in the collateral pool held by the master trust. In credit card transactions this is used to absorb the monthly fluctuations in the balance outstanding on the credit cards and ensure there is always sufficient collateral to support the notes. In RMBS transactions the minimum seller s interest tends to be smaller as the mortgages have a more stable repayment profile, and this is primarily available to cover set-off risk in the event of originator insolvency. In existing transactions it is the minimum trust size rather than the minimum seller s share that has been the key constraint. 

The principal-repayment profile and expected amortization of the underlying loans... 

Borrower Profile A number of special factors may arise with nonconforming borrowers. These range from people with court judgements against them for failing to repay a debt or even a previous bankruptcy (1.25-2.50x) to borrowers who cannot provide sufficient proof of income (1.25-1.75x). 

Where the majority of properties are tenanted via occupational leases, as is common in CMBS deals, it is useful to consider the profile of the expiry of those leases within the term of the transaction. Indeed, where investors rely on a refinance of certain loans in order to repay the principal, the lease profile after the loan maturity may also be important. 

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