when interest rates are low and it becomes cheaper to borrow homeowners are incentivized to refinance their mortgages resulting in higher levels of prepayment of the original loans within the mbs this increase will show in the pool factor as the outstanding principal balance current face shrinks faster than in previous months and the pool factor drops further than its normal monthly average 
mbs investors generally do not want to see the pool factor dropping faster than planned because it results in a lower overall return for them when a loan s principal is paid off early future interest payments will not be paid on that part of the principal quicker repayments as a result of mortgage refinancing also leave investors suddenly finding themselves with money they need to reinvest if it s a declining interest rate environment investors are stuck with lower yielding assets that pay a lower return than the mbs they had initially purchased benefits of original facethe original face gives investors the option to choose how much money they potentially want to earn from an investment later on down the line the figure continues to be consulted as a key reference point enabling investors to establish how an mbs is doing now compared to when it first started out and determine its return on investment roi the original face is used by traders and investors in modeling and determining valuations of an mbs over its lifetime identifying the original face value of an mbs at its time of inception and then comparing the value to the current face should provide an idea of how reliable those valuation assumptions were at the onset looking at both original and current face values can reveal for example whether the assumed prepayment rate was accurate and if the valuation is higher or lower than it should be in light of the actual prepayment risk to date 