What is Pool Factor?
Pool factor is the fraction of the original pool balance still outstanding. A pool factor of 0.85 means 85% of the original balance remains and 15% has paid down through scheduled amortization, prepayments, and losses. Pool factors decrease over time as principal is returned to investors. The rate of decline reflects the combined effect of scheduled principal, prepayment speed, and defaults. Monthly pool factor updates are provided by the servicer as part of the remittance report.
Formula
Pool Factor = Current Balance / Original Balance Monthly change in factor reflects: - Scheduled principal - Prepayments (CPR/SMM) - Defaulted principal
How LoanBook Uses Pool Factor
LoanBook tracks pool factors in the remittance module and uses them to reconcile expected vs. actual principal returns. Deviations between projected and actual pool factor changes indicate prepayment or default speeds differing from assumptions.
Frequently Asked Questions
What is the starting pool factor?
1.0 (or 100%). At origination, the full balance is outstanding. The factor declines over time as principal pays down.
Related Terms
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