Why does the weighted average loan term differ from the weighted average remaining maturity?
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A weighted-average maturity (WAM) is found by weighting the remaining number of months to maturity for each mortgage loan in the pool by the amount of the mortgage outstanding. This measure is also referred to as the weighted average loan term (WALT). A WAM of 360 months means that the mortgages were newly originated.After origination of the MBS, the WAM of a pool changes. Fannie Mae and Freddie Mac report the remaining number of months to maturity for a loan pool, which they refer to as weighted average remaining maturity (WARM). Both Fannie Mae and Freddie Mac also report the weighted average of the number of months since the origination of the security for the loans in the pool. This measure is called the weighted average loan age (WALA).
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