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Re: mortgage bond

Posted by stefanadelbert on Apr 07, 2009; 11:03pm
URL: http://quantlib.414.s1.nabble.com/mortgage-bond-tp12877p12893.html

Hi Nathan

I'm very keen to take a look at your implementations. Are your classes based on the C++ (QuantLib) or the C# (QLNet) codebase? Would you mind giving me a brief overview of what you are trying to achieve or model? Is your aim to value mortgages (MTM) or just to generate events and schedules (a la the ubiquitous online mortgage calculator, which is incidentally what I am trying to achieve)?

I would potentially be very keen to collaborate with you on this. It might require a shared codebase, possibly a branch off the QuantLib or QLNet trunk.

Stef

Nathan Abbott wrote
I have a version of a Loan class, a FixedRateLoan class, a MortgageBond
class, and a FixedRateMortgageBond class that I am working on. If any body
wants to look at them just email me. Any suggests and comments would be
helpful.

On Sun, Apr 5, 2009 at 10:56 PM, stefanadelbert <stefanadelbert@gmail.com>wrote:

>
> I was thinking of doing something fairly similar with QuantLib as part of a
> homeloan calculator I'm working on. My idea was to add to the C# codebase
> that is part of QLNet and extend the Bond class. I'm not as concerned about
> pricing the mortgage as generating payment and amortising principal
> schedules.
>
> My background is in C++ so I would be OK working on C++ codebase, but would
> prefer to work directly on the C# codebase as C# would suit my purposes
> better.
>
> Please get in touch if you reckon we could collaborate on this.
>
> Stefan
>
>
> Nathan Abbott wrote:
> >
> > I am c++ programmer that only knows the basics of quantitative finance.
> > Because I have been programming with QuantLib for two years, I think I
> > have
> > a good understanding on how QuantLib works. Luigi Ballabio's *
> > Implementing
> > QuantLib *has been a great help on understanding QuantLib. I am working
> > with
> > a financial person who uses my program, He is fluent with quantitative
> > finance, but only knows a little c++ and does not know how QuantLib
> works.
> >
> > We want to implement a simple version of mortgage bonds through a
> > MorgtageBond class that will probably inherit from the Bond class (and
> > maybe
> > a FixedRateMortageBond and FloatingRateMortageBond classes derived from
> > the
> > MortgageBond class) and would like to solicit some
> > opinions/suggestions/objections.
> >
> > Currently we are thinking that it will be defined similar to the
> > amortizing
> > bond classes (taking in a vector of nominals and dates generated outside
> > of
> > QuantLib), but be derived from bond (and inherit all it's functions) and
> > adding specific functions to it (like weighted average life calculation).
> > Has anyone already done/thought of doing something similar?
> >
> > Secondly, assuming prepayments are not an issue (which for our purposes
> > they
> > are not), a simple mortgage bond is priced similar to corporate bonds,
> > meaning as a spread over swaps (i.e. on a yield basis, yield = swap rate
> +
> > spread), then use that sum as the yield to calculate the price. The bond
> > class has dirtyPrice and cleanPrice functions which take yield as an
> > input.
> > We can get the par rate from the yield curve by using the parRate
> function
> > or instantiate a simple swap (as explained in yieldtermstructure.hpp
> > comments).
> >
> > Our question is w.r.t the spread. We want to build a spread grid/matrix
> > with
> > rating on one axis/rows and maturity/columns on the other. We were
> > thinking
> > of creating a termspreadsurface (similar to capfloortermvolsurface) which
> > could be useful for mbs and corporate bonds (spread per rating/term). Has
> > anyone already done something similar?
> >
> > Btw, if anybody is interested in residential prepayments/OAS calculations
> > and willing to implement that or is working on that, please contact me
> and
> > we can hopefully coordinate. Please note however that we have limited
> > (almost zero) expertise on that subject.
> >
> >
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