Original Face

AAA

DEFINITION of 'Original Face'

The par value of a mortgage-backed security at the time it is issued. Unlike most other types of bonds, mortgage-backed securities return both principal and interest to the holder in periodic payments (usually monthly). Over time, the outstanding principal balance of a mortgage-backed security will be reduced. The original face remains an important and distinguishing piece of information associated with a mortgage-backed security.

INVESTOPEDIA EXPLAINS 'Original Face'

By definition, a new issue mortgage-backed security will have a pool factor of 1; in other words, the original face will equal the current face. As the principal is paid down, the current face will be less than the original face.

The current face is derived by multiplying the original face by the current pool factor.

RELATED TERMS
  1. Mortgage-Backed Security (MBS)

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

    A pool of fixed-income securities backed by a package of assets. ...
  3. Pass-Through Certificate

    Fixed-income securities that represent an undivided interest ...
  4. Pool Factor

    The percentage of the original principal that is left to be distributed ...
  5. Current Face

    The current par value of a mortgage-backed security (MBS). Current ...
  6. Treasury Direct

    The online market where investors can purchase federal government ...
Related Articles
  1. Profit From Mortgage Debt With MBS
    Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

  2. How Bond Market Pricing Works
    Bonds & Fixed Income

    How Bond Market Pricing Works

  3. Haunting Wall Street: The Halloween ...
    Options & Futures

    Haunting Wall Street: The Halloween ...

  4. Asset Allocation In A Bond Portfolio
    Bonds & Fixed Income

    Asset Allocation In A Bond Portfolio

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center