Single Family Mortgage Prepayment Recycling - A Rising Bond Rate Alternative: Kutak Rock

As prevailing interest rates rise dramatically, funding costs for new debt are similarly increasing. For housing finance agencies (HFAs), this can put upward pressure on the mortgage rates they are able to offer borrowers. Accordingly, some HFAs are looking at the possibility of utilizing an alternate source of lower-cost funding of new loans — recycling repayments/prepayments from existing seasoned loans associated with outstanding lower-rate tax-exempt single-family mortgage bonds. Some background and considerations when employing recycling strategies:

If you have any questions about this, please feel free to contact one of the attorneys in Kutak Rock’s Housing Finance Agency Practice Group.

Client Alert | June 28, 2022



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