A PO pays no coupon, but receives principal payments from amortization and prepayments. Other adjustments such as posting depreciation and prepayments are also done at this time. Income taxes withheld from payroll are not final taxes, merely prepayments. Generally speaking, mortgage prepayments tend to slow down as general interest rates increase. NAS bonds are designed to protect investors from volatility and negative convexity resulting from prepayments. In other words, mortgage prepayments are used to retire a specified maturity. Russian customers had typically given prepayments which had helped at maintaining cash reserves.