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Eagle Accounting supports MBS Lottery Bonds. MBS Lottery Bonds are mortgage backed securities that repay the principal of a security to investors based on a lottery selection (lottery selection is also known as a Random Lot Redemption). Therefore, because principal is repaid to investors in a lottery or random lot basis, the factors for the individual MBS Lottery Bond securities do not apply to the individual user or transaction. Therefore, trade panels default to a Factor of 1 when processing Lottery Bond trades. Repayment of principal is processed as voluntary calls rather than paydowns, and the Retrospective Amortization Process defaults to a Factor of 1 for the period being calculated retrospectively.

Set Up the SMF Record for a Lottery Bond

Eagle Accounting recognizes a Lottery Bond for an MBS when you set the security's Lottery

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(tag 11303) field to Yes.

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Table of Contents

Set Up Trades for a Lottery Bond

Because factors of MBS Lottery Bond securities do not apply to individual users or transactions, when the security's Lottery

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option is set to Y, Eagle Accounting's Open MBS/ABS/IO/

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PO and Close MBS/ABS/IO/PO trade panels default the Current Factor field to a value of 1 and lock that field. See the following figure, which shows the Open MBS panel.

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Set Up Call Corporate Actions for Lottery Bonds

Eagle Accounting allows you to process Call transactions for MBS securities when you set the Lottery Bond Flag to Yes. When you set up a corporate action record to represent the repayment of principal from a lottery call, ensure that you set up the Mandatory/Voluntary Indicator (tag 1734) field as Voluntary and set up a Voluntary Corporate election in the Corporate Action table. See the following figure, which shows the Create Calls/Puts/Refund panel.

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Set Up Paydowns for Lottery Bonds

If you set up a paydown record in the Corporate Action table for an MBS Lottery Bond, the Paydown procedure ignores the factor and does not process a paydown (or up) for a security with the Lottery Flag (tag 11303) field set to Yes.

Retrospective Amortization for Lottery Bonds

When running a Retrospective Amortization Calculation for a Lottery Bond in Eagle Accounting, the Earnings code sets the Factors for the period being calculated retrospectively to 1, and does not retrieve the factor for the period going forward. For the period going forward, Eagle Accounting utilizes the Mortgage Back Prepayment Model and Prepayment Speed (designated by the amortization rule) for the purpose of calculating the principal and interest components.

Trade Processing for Lottery Bonds

Both processing security type (PST) codes have the Open transaction (Buy or Shortsell) booked in the Open MBS/ABS/IO/PO panel, and the Close transactions (Sell or Buy To Cover) booked in the Close MBS/ABS/IO/PO panel. The system allows you to process these PST codes in these trade panels, necessary to support the processing of ABS securities.