Business and Personal Finance Dictionary

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• EARLY AMORTIZATION EVENT
  
  A type of credit enhancement used in asset backed securities. One or more triggers, defined in the asset backed security's documentation require the termination of revolving periods, controlled amortization periods and/or accumulation periods. Once triggered, the early amortization provision requires that the monthly principal payments be distributed to investors as they are received. The most common trigger is a measure of how the portfolio yield net of charge-offs exceeds the base rate of servicing plus the investor coupon rate. Also called a payout event.
  
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