Most MBS securitizations contain a call right that is vested with the servicer of the bonds. Imagine a pool of 4,000 30-year mortgages. By the time year 29 comes around, there may be less than 50 mortgages remaining. So the servicer is not stuck collecting from 50 mortgagees and applying those payments to various bonds, the call right allows the servicer to call the outstanding bonds and possibly re-securitize the remaining mortgages with other mortgages from other trusts that may have also been called. Typically, these call rights trigger when there is less than 5% to 10% of the original principal value of the trust remaining.
William R. Van de Water, Portfolio Manager is portfolio manager of an event-driven, non-agency RMBS strategy at Rational Funds. He joined ESM as a RMBS analyst and trader in June 2009 and became a managing director in December 2009. In 2014, Mr. Van de Water became a co-portfolio manager at ESM Management. From 2005 through March 2009, Mr. Van de Water worked in the Boston office of Susquehanna International Group. His primary responsibility was to analyze, and trade mortgage backed securities. Mr. Van de Water earned joint B.S. degrees in Physics, Business, Economics, and Management from the California Institute of Technology in 2005.