Surplus income from an asset-based security (such as a bond). It is the difference between the interest received by the security-issuer on the mortgages sold and the interest paid to the security holders. For example, alt-a and subprime mortgages are sold at interest rates higher than those for prime mortgages and therefore generate extra cash flow for the mortgagee. This excess is usually deposited into a reserve account and serves as a first line of protection for the security holders against losses. It is a type of internal credit enhancement. also called excess interest cash flow.
Related information about excess spread:
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Remaining net interest payments from the underlying assets of an asset-backed security, after all payables and expenses are covered.
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Definition of excess spread: Surplus income from an asset-based security (such as a bond). It is the difference between the interest received by the ...
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The excess spread is the difference between the interest rate received on the ... In the process of "turboing", excess spread is applied to outstanding classes as ...
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May 14, 2007 ... Excess finance charges spread is also referred to as Excess Spread. ... Excess spread is typically a source of credit enhancement for the ...
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The excess spread is the positive difference between the interest rate received on the underlying asset and the coupon rate paid to investors.
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Oct 5, 2008 ... The net excess spread is a type of internal credit enhancement in a securitization. In this simple structure, $100 million in loan assets are ...
- Excess Spread: Definition from Answers.com
Excess Spread An Asset-Backed Securities term for yield remaining after payments to bondholders are made, expenses paid, and losses covered.
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describes how the excess spread approach is used to price and manage the ... value of embedded options so that the excess spread rep- resents the expected ...