What is meant by an involuntary prepayment?

What will be an ideal response?

In regards to the reporting of nonagency RMBS, once a loan moves from the delinquent category to the default category, the borrower loses possession of the property and the mortgage servicer takes possession with the purpose of selling the property. The proceeds received by the servicer reduced by the costs associated with selling the property are referred to as the recovered principal. The servicer must report separately traditional prepayments— which are called voluntary prepayments — and credit-related prepayments — which are called involuntary prepayments. The reason for doing this is for determining the principal payments that must be distributed to the senior bond classes and for determining the losses (i.e., shortfall between the mortgage balance and the recovered principal) that must be allocated to the subordinated bond classes.

The monthly default rate is viewed as representing involuntary prepayments, and the CDR represents the involuntary prepayment speed calculated for non-agency RMBS. The cumulative default rate, abbreviated as CDX in order to avoid confusion with CDR, is the proportion of the total face value of loans in the pool that have gone into default as a percentage of the total face value of the pool.