medium · Asset-Backed Securities waterfalls
During the 'Controlled Amortization Period', how do principal payments to bondholders typically differ from payments during 'Rapid Amortization'?
- Controlled amortization payments are made in equal monthly installments over a set term, whereas rapid amortization pays out all available principal immediately.
- Rapid amortization can only be triggered once the sponsor formally enters bankruptcy proceedings, while controlled amortization is purely performance-based.
- There is essentially no real difference at all between these two periods; both simply result in a bullet payment at the expected final maturity date for the notes.
- Controlled amortization payments are instead variable, based on the actual cardholder monthly payment rate, while rapid amortization uses fixed scheduled installments.
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