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Commitment level is the rate at which a mortgage loan can be sold to another entity, such as Fannie Mae and Freddie Mac or other lenders. The Fannie Mae Commitment Rate is the level that Fannie needs for a nominal price loan. From the level of commitment, Fannie extracted a guarantee cost (which tends to average about 19bp). The remaining interest goes to the secondary market investor. Thus, Fannie Mae's Commitment Value is loosely the sum of Fannie Mae's current coupon rate and Fannie Mae's warranty fee.
Those, with the characteristics of loan pools, can be inputs for mortgage prepaid models.
Source of the article : Wikipedia
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