Yield Maintenance Prepayment Provision
Bottom Line Up Front (BLUF): Common on 5–25+ unit commercial multifamily and portfolio DSCR loans, yield maintenance calculates the present value of remaining scheduled interest payments discounted at current Treasury rates.
Underwriting Formula / Rule
Penalty = Max(1% Floor, Present Value of Remaining Cash Flows Discounted at Treasury Rate − Payoff Balance).
Wholesale Shelf Benchmark
Can be swapped for fixed step-down (5-4-3-2-1 or 3-2-1) on most wholesale Non-QM shelves.
Frequently Asked Underwriting Questions
Should I prefer step-down over yield maintenance?
Yes, for 1–8 unit investors, a fixed step-down provides 100% certainty of your maximum payoff fee regardless of Treasury rate movements.
Arranged by Loan Daddy LLC (NMLS #2827624 · (480) 485-1229 · quotes@loandaddy.ai). Business-purpose investment properties only.