For years, rocket scientists on Wall Street have forecast how fast pools of mortgages will pay off. Now, Mortgage Industry Advisory Corp. says it has devised a way to predict their predictions.

Its Mortgage Industry Medians service uses a computer model to estimate what Wall Street dealers would predict on any given day about prepayments. The aim is to help investors evaluate their mortgage assets.

Robert N. Husted, principal at Mortgage Industry Advisory, says the service will be particularly helpful to mortgage servicing companies, which will soon have to grapple with new accounting rules that will force them to evaluate their servicing rights more often.

Market expectations of how fast loans will be paid off push the value of servicing rights up and down. To evaluate their portfolios, mortgage companies use the median of Wall Street's prepayment forecasts, much as stock investors look at the average of analysts' earnings predictions.

The problem is that the dealers do not update their forecasts daily - but that U.S. Treasury yields and mortgage rates, which influence their prepayment models, change every minute.

The Bond Market Association, a trade group, polls 11 top dealers of mortgage-backed securities twice a month for their prepayment forecasts. Participants post their updated predictions on the first and 15th of the month.

Suppose a mortgage company wants to determine the value of its servicing portfolio on the 12th. If it uses the median dealer estimate from the trade group survey, it will be basing its valuation on market conditions on the first of the month. But if rates have fallen much since then, dealers are likely to revise their prepayment forecasts on the 15th - which means the company would have to reprice its portfolio again.

"The value of the portfolio can change because of the timing of the survey," Mr. Husted said.Bloomberg LP has a similar survey, in which some dealers update more than twice a month. But not all do, nor do they all provide estimates for the same pools. "You still don't have a full consensus to draw on in the intervening periods," Mr. Husted said.

To help evaluate a portfolio on the 12th of a month, for example, Mortgage Industry Medians would estimate what the dealers would forecast on that date. To do so the computer model will consider dealers' forecasts in various interest rate environments back to 1992.

The medians are updated daily. The user sees only a median, not the various components; Mortgage Industry Medians would not tell, for example, what it thinks Lehman Brothers or Goldman Sachs is thinking on the 12th.

After Financial Accounting Standard 133 goes into effect in June, servicers will be penalized harshly if their hedges are not deemed "effective" - that is, if the movements in their hedges do not closely match the changes in the value of their servicing.

This will behoove servicers to check values more frequently, making Mortgage Industry Medians even more important, Mr. Husted said.

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