Yield Maintenance


Also found in: Acronyms.

Yield Maintenance

The extra money a prepaying borrower would have to pay to make the yield the same for the lender if the borrower made all, regularly scheduled payments until maturity. When a borrower prepays a loan or other debt investment, the lender loses the interest the borrower otherwise would have paid. The lender may charge the yield maintenance as a prepayment penalty to ensure that it makes the yield regardless of whether or not the borrower prepays. This has the effect of making prepayment or refinancing unattractive to the borrower.
References in periodicals archive ?
Once a Yield Maintenance penalty is paid, the lien is released from the real property, allowing the borrower to simultaneously either refinance, or sell their property free and clear.
Almost all conduit loans now require the loan to be defeased rather than paid off with a prepayment fee or yield maintenance once the lock-out period expires.
Additionally, Freedom will pay yield maintenance to the company as partial consideration for the sale, which equals USD750,000 per quarter in 2017.
The Lender charged a no commitment fee and the loan has a yield maintenance penalty in the case of prepayment.
The Addendum to the note deals with such matters as prepayments, yield maintenance and exculpation.
The loan has a 15-year term with five-years of interest-only followed by a 30-year amortization period and a 14.5-year yield maintenance period.
This cash-out refinancing was underwritten with a 10-year term, including 9.5 years of yield maintenance and a 30-year amortization schedule.
Since Fitch's last rating action, six loans totaling $174 million were prepaid prior to their scheduled loan maturities with yield maintenance penalties or during their open period.
The fixed-rate loans have a seven-year term with five years of yield maintenance.
Although credit enhancement has increased since Fitch's last rating action from scheduled loan amortization and the prepayment of two loans, Station Place and Promenade on Providence, with yield maintenance penalties, the pool has become increasingly more concentrated.
The fixed-rate loan has a 10-year term, with 2.5 years interest only, yield maintenance of seven years, and a 30-year amortizing schedule.
While properties that have freely prepay-able mortgages have been actively refinancing their mortgages, more and more owners of multifamily and healthcare properties are paying sometimes large prepayment penalties--often in the form of defeasance or Yield Maintenance payments --for the sake of locking in today's low rates for the longest term possible.