medium · Asset-Backed Securities asset-nuances
A lender sells the guaranteed portion of an SBA 7(a) loan at a price of 108.
If the loan prepays immediately (Month 1), how does this affect the investor's yield compared to a loan that lasts its full 10-year term?
- The yield is unaffected because SBA loans have 100% lockout periods
- The yield increases due to the 'Special Allowance Payment' (SAP)
- The yield decreases significantly due to premium amortization
- The investor receives a 'Yield Maintenance' penalty that covers the loss
Sign up free to see the explanation and track your rank →
More Asset-Backed Securities asset-nuances practice
- Which explanation best identifies the additional spread components in the non-agency bond?
- A portfolio of student loans originated before 2010 carries… — What is the specific name f
- A 10-year CMBS Interest-Only (IO) strip is being valued. If a large number of loans in the
- If a small business borrower defaults, what is the primary source of principal recovery fo
- If a conduit CMBS loan with a $50 million balance becomes 60 days delinquent, which transa
- In a conduit CMBS transaction with 60 loans, a property's De… — Who is this party?
- An SBA guaranteed pool has a $100 million par value and is priced at 108. If the expected
- If the seller offers early payment discounts to its customers, this reduction in the recei