Exhibit 2. Example of practical pay-up computation

Pool	Description	Theoretical Pay-up		Expected Amortization	Discounting	Practical Pay-up
		Next month	7 months forward	Between months 1 & 7	6 months, 1 month forward
abc123	New Pool	0.2	0.0	0.88	0.97	0.2
xyz123	LLB Pool	0.3	0.15	0.88	0.97	0.17

The last column in Exhibit 2 is computed as:

Practical pay-up = Theoretical pay-up (next month settlement) -
[Theoretical pay-up (7 months settlement)]*[Amortization factor]*[Discounting]

Pool abc123 draws its pay-up from being early on the age ramp; in 7 months there will be little difference between it and TBA. In contrast, pool xyz123 has low balances; its forward pay-up is still essential, though perhaps limited due to the steep forward curve making refinancing differences less important. In the end, a pool with seemingly higher theoretical pay-up may end up with a lower practical pay-up. Once again, we emphasize the knowledge of horizon as the key entry to this practical pay-up analysis.

The entire analysis, including processing massive dealer offerings, can be done fairly quickly using AD&Co OAS version 5.2b.