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BENEFITS OF DOCUMENT
DOCUMENT DESCRIPTION
Collateralized Mortgage Obligations Model presents a simple model where mortgage-backed securities are used as collateral. Mortgages are pooled and interests in these pools are sold to investors in classes or tranches. Bondholders buy into these tranches and receive cash flows. The payments are prioritized according to their class. Some bondholders receive cash flows automatically while others choose to defer cash flows based upon a future higher return or some other greater return. Deferring the payments may yield a greater return but this is in exchange for a greater risk taken by the tranches holders.
So, a quick overview of the model, in the contents tab you can see the structure of the model, and by clicking on any of the headlines to be redirected to the relevant worksheet.
On the manual tab, you can feed the general information for the model such as: model name, responsible, the timeline of the model, and date, and currency conventions.
Additionally, there is a description of the color-coding of the model in the same tab. Inputs are always depicted with a yellow fill and blue letters, call up (that is direct links from other cells) are filled in light blue with blue letters while calculations are depicted with white fill and black characters.
There is also a color coding for the various tabs of the model. Yellow tabs are mostly assumptions tabs, grey tabs are calculations tabs, blue tabs are outputs tabs (that is effectively results or graphs) and finally, light blue tabs are admin tabs (for example: the cover page, contents, and checks).
Moving on to the inputs tab, you can adjust the various assumptions of the model based on the specifications and requirements of your business (in yellow whatever can be amended as an assumption): mortgages assets principal, coupon rates, and remaining term. You can also set the amount of the tranches (just make sure this is equal to the approximate bond value of the bonds), the interest rates of each tranche, and the price to the public.
Furthermore, you can also adjust the payments per year of the tranches (maximum 12), when the first tranche payment is made, as well as the prepayment rate.
Additionally, on the charts tab, a series of charts are presented: assets principals and bond values, tranches amount and price to public, assets, and tranches interest rates, asset and tranches balances, cash flows, asset cash flows split, tranches profit and internal rate of returns, asset internal rate of returns and prepayments, and cash flow equivalence.
Finally, the checks tab where the most critical checks are aggregated. Whenever you see an error message on any page, you should consult this page to see where the error is coming from.
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Source: Best Practices in Real Estate Excel: Collateralized Mortgage Obligations Model Excel (XLSX) Spreadsheet, Big4WallStreet
ABOUT THE AUTHOR: BIG4WALLSTREET
We help small and midsize businesses' leaders with their strategic problems by creating or improving financial models, implementing tools to drive efficiency, performance, and better decision making.
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With over a decade of experience in Financial & Business Modeling / Planning, Performance & Analysis, we have developed strong business understanding across diverse industries (Energy, Shipping, Manufacturing, Retail, Oil & Gas, Infrastructure, Food & Beverages, Agriculture, Healthcare, Telecoms, Real Estate, Construction & Hospitality), as well as strong capabilities across a range of financial modeling solutions.
We are one of the few financial modelers to be certified from both the Corporate Finance Institute (Financial Modeling & Valuation Analyst, Business Intelligence and Data Analyst), and the Financial Modeling Institute (Advanced Financial Modeler, Certified Financial Modeler). We build integrity and trust by providing high-quality tailor-made solutions to our clients.
Furthermore all these models can be tailor made upon your request in order to meet any special requirements for your projects should you not find something that suits you.
Big4WallStreet has published 41 additional documents on Flevy.
DETAILS
This business document is categorized under the function(s): Financial Model
It applies to Real Estate
File Size: 3.8 MB
Related Topic(s): Real Estate
Purchase includes lifetime product updates. After your purchase, you will receive an email to download this document.
Initial upload date (first version): Jan 18, 2023
Most recent version published: Jan 18, 2023
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