KIC000026 - .- Commercial Mortgage Loans (continued) o Call...

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.... ------------------------------------------------ •• Commercial Mortgage Loans (continued) o Call Protection o A prepayment lockout is a contractual agreement that excludes any prepayments during the lockout period . .After the lockout period, call protection usually comes in the fonn of either prepayment penalty points or yield maintenance charges. o With defeasance, the borrower provides ample funds for theservicer to invest in a portfolio of Treasury securities that replicates the cash flows that would exist in the absence of prepayments. ;:_~"':Ol~;'. .."""""'". .. ,.." ""',~,I_Ilj)",r","",,,,Mcll Commercial Mortgage loans (continued) o Call Protection a Prepayment penalty points are predetermined penalties that must he paid by the borrower if the borrower wishes to refinance. Prepayment penalty points are not always an effective means for discouraging refinancing . o
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KIC000026 - .- Commercial Mortgage Loans (continued) o Call...

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