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Prepayment penalty |
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Prepayment penaltyLenders can impose a penalty on a borrower who pays a loan off before its expected end date.Prepayment penaltyA fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity.Prepayment penalty Similar MatchesFHA prepayment experienceFHA prepayment experienceThe percentage of loans in a pool of mortgages outstanding at the origination anniversary, based on annual statistical historic survival rates for FHA-insured mortgages. Zero prepayment assumptionZero prepayment assumptionThe assumption of payment of scheduled principal and interest with no payments. Prepayment feePrepayment feeIn the US, a fee charged to a borrower by a lender when a loan or mortgage is repaid ahead of schedule. In the UK, building societies impose a similar charge, typically binding the borrower to at least three years of repayments if such a charge is to be avoided. Prepayment speedPrepayment speedAlso called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. Lag response of prepaymentsLag response of prepaymentsA delay of typically about three months between the time the weighted-average coupon of an MBS pool crosses the threshold for refinancing and observation of an acceleration in prepayment speed is observed. Further SuggestionsPrepayments |
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