Mortgage Yield Maintenance Calculator

Yield maintenance preserves lender's expected yield to maturity, can be expensive prepayment cost.

Current balance

Note rate %

Treasury rate (matching term) %

Remaining months

Minimum penalty %

Yield maintenance penalty

$300,000

Rate spread %

0.01%

Minimum applied

How the math works

YM = balance × (note rate − treasury) × remaining months / 12. Floor: minimum %.

$5M × (5.5% − 4.0%) × 48/12 = $5M × 1.5% × 4 = $300,000 yield maintenance penalty.

How to Use

Enter current balance.
Enter note rate %.
Enter treasury rate (matching term) %.
Enter remaining months.
Enter minimum penalty %.
Read yield maintenance penalty.

Frequently Asked Questions

Yield maintenance formula?

Standard: PV of (note rate − Treasury rate at remaining term) × balance × remaining months / 12. Floor: usually 1% of balance or 12 months interest minimum. Treasury benchmark: T+matching remaining term, sometimes T+50 spread. CMBS standard: 'greater of 1% or yield maintenance.' Defeasance alternative (CMBS only): substitute portfolio of US Treasuries paying loan principal + interest. Defeasance + transaction costs: $50–250k typical professional fees.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.