A system and method for allocating principal payments by creating Capped NAS/AS securities classes, Both scheduled and unscheduled principal prepayments are redirected, subject to a maximum percentage, or cap, as determined by formula. The formula is a novel payment priority rule that redistributes risks related to the borrower's prepayment option through prioritization of the cash flows among the NAS/AS Classes, allowing for the efficient creation of classes with more and less WAL stability to meet specific investor's needs.