prepayment privilege

(redirected from Prepayment Clauses)

Prepayment Privilege

The right of a borrower to repay a debt in full before it is due. The prepayment privilege is favorable to the borrower because it relieves him/her of the debt, but it deprives the lender of interest that he/she would have received otherwise. However, some lenders offer the prepayment privilege to encourage potential borrowers to borrow from them instead of their competitors.
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prepayment privilege

See prepayment clause.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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- Recent decisions relating to prepayment clauses, including EFH and Momentive
Many consumers aren't familiar with prepayment clauses. Not knowing, however, could cost you money.
Bank of America, San Francisco, interestingly the pioneer of conventional mortgage-backed securities in 1977, has been a leader in experimenting with prepayment clauses to enhance its portfolio return.