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Aging

• Is the concept which assumes that newly issued mortgages tend to prepay slower than mortgages which are older or seasoned. This aging refers to the underlying collateral and not the securities created upon that collateral.

 
 Embedded terms in definition
 Collateral
Seasoned
Securities
Underlying
 
 Referenced Terms
 Pre tax profit on sales: Also known as Profit Margin; Profitability. Calculated by dividing the Pre-tax Income by Net Sales: (Net Income / (1 - Tax Rate)) /Revenues.
This measures the effectiveness of management in controlling expenses and is a useful measure of overall operational efficiency when compared with prior periods or other companies in the same business. This return on sales varies widely between industries (e.g. 2% return for supermarkets is reasonable, but manufacturing industries should return 4-5%). A declining profit margin can be caused by declining sales, declining efficiency, Aging plant and equipment, or inappropriate management decisions. If quarterly pre-tax income is not available, you can estimate the tax rate from the yearly tax rate.

 Seasoned: Is a mortgage industry term that describes the Aging process underlying collateral. It refers to mortgages, which are at least 30 months old and are expected to have relatively stable prepayment rates.

 
 Related Terms
 Aging of accounts receivable
Aging schedule

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