How To Calculate Spread Maintenance

How is maintenance yield calculated?

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What is a spread payment?

Spread Pay is a payroll option that takes the projected fiscal year salary or payroll and divides by the number of projected pay periods (normally 26 pay periods per year).

How is prepayment formula calculated?

Multiply your principal by the difference (200,000 * 0.02 = 4,000). Divide the number of months remaining in your mortgage by 12 and multiply this by the first figure (if you have 24 months remaining on your mortgage, divide 24 by 12 to get 2). Multiply 4,000 * 2 = $8,000 prepayment penalty.

What is a spread maintenance date?

Spread Maintenance Payment means a payment to Lender in an amount equal to the outstanding principal balance immediately prior to a prepayment under the last paragraph of Section 2.3. 1 hereof, multiplied by 2.5%, divided by 12 and multiplied by the number of months remaining in the Lockout Period.

What is yield maintenance vs defeasance?

Yield maintenance is the actual prepayment of the loan, while defeasance entails a substitution of collateral and a legal assumption of the loan by the successor borrower. A yield maintenance prepayment has two components: the unpaid principal balance of the loan and a prepayment penalty.

How do you calculate spread?

The calculation for a yield spread is essentially the same as for a bid-ask spread – simply subtract one yield from the other. For example, if the market rate for a five-year CD is 5% and the rate for a one-year CD is 2%, the spread is the difference between them, or 3%.

How do you calculate net spread?

The spread is the difference between the average rate earned on assets minus the average rate paid on liabilities. That spread would only equal the net interest margin percentage if the dollar amount of earning assets equaled the dollar amount of interest-bearing liabilities.

What is spread management?

Spread management is the process of managing the spread. It refers to managing the monetary difference between the return on assets and the cost of liabilities over time.

How do you calculate yield maintenance prepayment penalty?

A prepayment penalty – this is typically determined by calculating the present value of the remaining loan payments, with a discount factor equal to the current yield on the U.S. Treasury that matures closest to the loan’s maturity date.

How are prepayment speeds calculated?

The CPR is an annual prepayment rate. To estimate monthly prepayments, the CPR must be converted into a monthly prepayment rate, commonly referred to as the single-monthly mortality rate (SMM). A formula can be used to determine the SMM for a given CPR: SMM = 1-(1-CPR)¹/¹2.