Pool Factor

What is a 'Pool Factor'

The percentage of the original principal that is left to be distributed in a mortgage-backed security, as represented by a numerical factor that will be attached on periodic market quotes and other presentations of the MBS's price.

Calculated as:

Pool Factor

BREAKING DOWN 'Pool Factor'

For example, if the face amount of a pooled MBS is $100,000 and the stated pool factor is 0.4587, the remaining balance in the security, yet to be paid to the investor, would be $45,870.

The pool factor is only used to describe mortgage-backed securities, which can be issued by Freddie Mac (FHLMC), Fannie Mae (FNMA) and Ginnie Mae (GNMA).

A pooled MBS is one whose component mortgage payments are passed through to the investors, month to month, until the mortgage pool has been completely paid off, instead of being rebundled or collated,