Definitions for "Yield Maintenance"
The prepayment premium which will equal the present day value of any costs the to the lender resulting from the difference in interest rates between the date of the note and the date on which the prepayment was made. In layman's terms, the borrower must pay the lender enough cash to replace the loans future cash flows using Treasury Securities.
a prepayment premium that allows investors to attain the same yield as if the borrower made all scheduled mortgage payments until maturity. Yield maintenance premiums are designed to make investors indifferent to prepayments and to make refinancing unattractive and uneconomical to borrowers.
A prepayment premium that allows lenders to attain the same yield as if the borrower made all scheduled mortgage payments until maturity. The lender collects a lump sum from the borrower based on a formula that considers the present value of the difference between the prepaid loan's interest rate and current rates with a similar maturity date.