prepayment

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prepayment

[-pā′mənt]
Etymology: L, prae + pacere, to pacify
the payment in advance for health care services by subscribers to a third-party insurance program.
References in periodicals archive ?
While losing the ability to tweak cash flows to one's particular needs may inconvenience many borrowers and push some borrowers at the margin out of the market, economic theory suggests that prepayment penalties may be playing a more fundamental role in the functioning of subprime mortgage markets.
With prepayment penalties, Freddie Mac notes on its Web site, a borrower should be given the choice of including a prepayment penalty and should never be required to do so.
Not only do prepayment penalties lock borrowers into the higher-cost subprime market or force them to give up the wealth they have built through homeownership, but they also turn out to offer no benefit to borrowers in the form of lower interest rates, as the subprime industry has claimed.
The database contained approximately two million loans originated from 2000 through 2002 across the country; two-thirds of the loans were refinances, 81 percent of the loans were for single-family residences, and the percentage of loans with prepayment penalties was approximately 68 percent.
The OTS proposed rulemaking would prevent unregulated finance companies from claiming federal preemption of state consumer protection laws governing prepayment penalties (prohibited or limited in 35 states) and late fees in subprime loans.
It can be ideal if prepayment on an existing first mortgage is either legally prohibited or has high prepayment penalties, yet provides an attractive loan-to-value ratio.
Mavent's review functions include aspects of the Truth In Lending Act; HOEPA, state and local high cost reviews; loan level lender and broker license reviews; state consumer credit laws relating to such terms as usury, fee restrictions, prepayment penalties, and late fees; certain requirements of the Home Mortgage Disclosure Act; the Office of Foreign Asset Control; and, investor program requirements, such as an accurate Fannie Mae points and fees threshold test.
No financing points or application fees are necessary and there are no prepayment penalties.
Prepayment penalties will be waived six months prior to the scheduled maturity date of the mortgage note.
The notes are backed primarily by prepayment penalties and monthly excess spread not used to offset losses in the LBSBC series 2006-1 transaction -- see Fitch press release 'Fitch Rates Lehman Brothers Small Balance Commercial, Series 2006-1,' dated April 4, 2006 and available on the Fitch Ratings web site at www.
Evidence indicates that the vast majority of mortgage fraud and predatory lending activities - including excessive fees, provision of credit life insurance and prepayment penalties - occurs in the conventional subprime lending market.
As Ameriquest's California regulator, we are pleased with the outcome of this settlement as it provides consumers with new standards of disclosure in many areas, including interest rates and prepayment penalties, that we hope will become the norm in the mortgage lending market," said California Corporations Commissioner Wayne Strumpfer.