closed-end mortgage

(redirected from Closed End Mortgage)

Closed-end mortgage

Mortgage against which no additional debt may be issued.

Closed-End Mortgage

1. In banking, a bond secured by a mortgage in which the mortgage may not be paid off before maturity, and the property in question may not be used as collateral on any other transaction without the bondholder's permission.

2. In real estate, a mortgage in which the principal amount may not be increased. Further borrowing is not permitted using the same mortgage as collateral.

closed-end mortgage

A mortgage with a prohibition against additional borrowing using the same lien. The prohibition against additional borrowing protects the existing creditors from having the security diluted. Compare open-end mortgage.

closed-end mortgage

A mortgage loan in which all sums have been funded at closing.Contrast with open-end mortgage, in which the principal balance may increase over time. A home loan is typically a closed-end mortgage;a construction loan is typically an open-end mortgage.

References in periodicals archive ?
For ANB's June 30 Call Report, the agreement provides that the retained interests be calculated based on an 18% discount rate on the interest-only strip ("I/O") and subordinated trust assets, a 15% discount rate on the contractual mortgage servicing rights ("CMSR"), a prepayment rate that represents the average prepayment experience for the six months ended February 29, 2000 and cumulative loss rates as a percentage of original principal balance of 6% on closed end mortgage loans and 8% for HELOC (open end) mortgage loans.
The Group 2 mortgage pool consists of first lien adjustable-rate closed end mortgages with cut-off date pool balance of $1,884,999,832.