Excess Spread

Business, Legal & Accounting Glossary

Definition: Excess Spread

Excess Spread

Full Definition of Excess Spread

Surplus income from an asset-based security (such as a bond). It is the difference between the interest received by the security-issuer on the mortgages sold and the interest paid to the security holders. For example, alt-a and subprime mortgages are sold at interest rates higher than those for prime mortgages and therefore generate extra cash flow for the mortgagee. This excess is usually deposited into a reserve account and serves as a first line of protection for the security holders against losses. It is a type of internal credit enhancement. also called excess interest cash flow.

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Excess Spread. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
December 01, 2022 https://payrollheaven.com/define/excess-spread/.
Chicago Manual of Style (CMS):
Excess Spread. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/excess-spread/ (accessed: December 01, 2022).
American Psychological Association (APA):
Excess Spread. PayrollHeaven.com. Retrieved December 01, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/excess-spread/

Definition Sources

Definitions for Excess Spread are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.