Current Face


DEFINITION of 'Current Face'

The current par value of a mortgage-backed security (MBS). Current face is determined by multiplying the current pool factor by the mortgage-backed security's original face value. A mortgage-backed security's current face represents the outstanding principal balance (or its outstanding face value) of the mortgage's underlying the security.

If the MBS pays interest and principal on payment dates, the current face will decline after each payment is made.

BREAKING DOWN 'Current Face'

Different mortgage-backed securities with the same issue date, same coupon and same original face value can have greatly different current faces. Mortgage-backed securities pay down at different rates based on the characteristics of the underlying loans and on the actual prepayment speed of underlying mortgages.

For example, suppose that two mortgage-backed securities (MBS 1 and MBS 2) have the same original face value, but MBS 1 experiences faster prepayments then MBS 2. In this case, MBS 1 will have a lower current face value then MBS 2 as time progresses.

  1. Prepayment

    The satisfaction of a debt or installment payment before its ...
  2. Pool Factor

    The percentage of the original principal that is left to be distributed ...
  3. Pass-Through Certificate

    Fixed-income securities that represent an undivided interest ...
  4. Prepayment Risk

    The risk associated with the early unscheduled return of principal ...
  5. Mortgage-Backed Security (MBS)

    A type of asset-backed security that is secured by a mortgage ...
  6. Pass-Through Security

    A pool of fixed-income securities backed by a package of assets. ...
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