Abstract
The financial institution will increase the financial efficiency and diminish the cost of capital by asset securitization. So we know there are some risks in the process of asset securitization, those include interest risk、default risk、prepay risk 、operation risk and so on. The primary risks in mortgage backed securities are default risk and prepay risk. Especially the side of prepay risk, most of previously research report or thesis do not think about the house price and loan to value at the time of borrower to prepay the unbalance of mortgage. These not only affect the probability of prepayment but also affect the probability of default very much. This thesis adds the constraint into previously model in order to survey overview of prepayment and default. We also to view how huge of the constraint affect the probability.