The maximum amount of the curtailment cannot exceed the lesser of $2,500 or 2% of the original loan amount for the subject loan. The purpose is to bring the loan into compliance with the maximum cash-back requirement. In this case, the lender can apply a curtailment to reduce the amount of cash back to the borrower.

If the borrower receives more cashback than is permitted for limited cash-out refinances.

It can be for any amount but in accordance with applicable regulatory requirements.

The lender may apply a curtailment to refund the overpayment of fees or charges paid by the borrower.

Fannie Mae permits curtailments for the following reasons: Principal Curtailment on a Fannie Mae MortgageР вЂќР вЂћ principal curtailment is the application of funds used to reduce the unpaid principal balance of the mortgage loan. However, consumers are most likely to come across the word in their mortgage contracts.

The term describes a reduction in deliveries to customers due to a shortage or reduction in demand.

The word curtailment is also commonly used by energy companies. As a result, it may shut down part of its operation temporarily or permanently in order to reduce expenses and conserve capital. A company may curtail some of its business activities in response to financial troubles. Each must quickly respond to changes in supply and demand. This is particularly common in the oil and gas industry and for electricity suppliers. For example, a company may impose a curtailment on production in response to short-term market conditions. The term is used in a variety of business operations. The word curtailmentcan be applied to a deliberate restriction or reduction placed on any activity. Mortgage curtailments can also happen to correct lender errors, accounting errors, or closing irregularities.

Usually, this occurs when the terms of your loan change to make it easier for you to pay. Curtailments can also happen as part of a loan modification. Principal curtailment happens when you pay extra every month or if you occasionally make large principal payments on your mortgage. Mortgage principal curtailment is a banker-speak for saying that you owe less on your home loan. Mortgage Principal Curtailment vs Business Curtailment A total mortgage curtailment occurs when the balance of the loan is paid off with a lump sum ahead of schedule. A mortgage loanР вЂ™Р’В may be satisfied by curtailment when theР вЂ™Р’В homeowner pays off the balance ahead of schedule.Р вЂ™Р’В Borrowers can make an extra payment against the principal amount owed in order to reduce the outstanding balance. However, principal curtailment has a slightly different meaning in the mortgage industry. The word is often used to describe reductions in production and limits on energy output or delivery. This restriction can be temporary or permanent. The word can be seen in business announcements where curtailment where a restriction is imposed on any activity. In general, curtailment means to restrict or reduce something, to cut it short, or to finish early. This helps you save a lot of money in interest payments over the life of the loan. The more extra payments you make, the faster the principal balance on the mortgage reduces. The additional payments are applied to the principal balance on the loan. Principal curtailment for a mortgage or loan refers to making extra payments or paying periodic lump sums towards debt to pay it off faster. Share on Digg Share What Is Principal Curtailment?

Loan principal definition