Posted by David Butler on December 12, 2000 at 22:46:43:
Your man is right, and yes, lenders often charge a higher “add-on” rate when waiving the prepayment fee (which of course, they have to do in states where the fee is not legal). Don’t know how NJ specifically treats that matter, but lenders will generally find a way around it, in terms of making it up somewhere else. In the scheme of life, money seeks the path of least resistance, and that’s the nature of the financial markets.
Not sure what you mean by “…the difference between an “institutional” lender and say one that lends in the secondary market?” The secondary markets are where existing loans are bought and sold between lenders and various investors. There are some specialists who operate primarily in those markets as lenders, offering “rediscount lines” to the entities that are doing the actual buying and selling. With the exception of a select billionaire or two, most of that activity is intitutional, in that it will frequently come from large pension funds, insurance companies, and occasionally an REIT or two.
Hope that helps to at least some degree!
David P. Butler