What is the difference between a current refunding and advance refunding?
A current refunding is one in which the outstanding (refunded) bonds are redeemed within 90 days of the date the refunding bonds are issued. In an advance refunding, the refunded bonds are redeemed more than 90 days from the date the refunding bonds are issued.
What is advance refunding?
When any of the proceeds of a refunding issue are held longer than 90 days before being used to pay debt service on a prior issue, the issue is an advance refunding issue.
What is a refunding escrow?
An escrow refund occurs when your escrow account contains excess funds and you receive a check in the amount of any remaining balances. If the escrow account has a surplus of less than $50 at the at time of the annual escrow account analysis, then the loan servicer has the option to refund the excess funds.
Can you refund a refunded bond?
If the original bond was issued after 1985, only one advance refunding is permitted with respect to that bond, including any bond that refunds that bond. If the original bond was issued before 1986, two advance refundings are permitted taking into account the following modifications under IRC Section 149(d)(6):
How does an advance refunding work?
Advance refunding refers to the practice of taking the funds received from a new bond issuance to pay off a prior issue’s debt. The bond issuer places the proceeds from the sale of the newer issue (refunding bond) in an escrow account until they call the older (refunded bond) issue.
How does debt refunding work?
What Is Refunding? In corporate finance and capital markets, refunding is the process where a fixed-income issuer retires some of their outstanding callable bonds and replaces them with new bonds, usually at more favorable terms to the issuer as to reduce financing costs.
Why did I get an escrow refund?
Typically, when you take out a mortgage, your lender requires you escrow your taxes and insurance. This means that you pay money toward these annual expenses when you make your monthly principal and interest payments. If your escrow account contains excess funds, then you receive an escrow refund check.
What does it mean when a bond is pre refunded?
What Is a Pre-Refunding Bond? A pre-refunding bond is a debt security that is issued in order to fund a callable bond. With a pre-refunding bond, the issuer decides to exercise its right to buy its bonds back before the scheduled maturity date.
What is a general obligation refunding bond?
Refunding bonds are bonds that are issued to replace and refinance outstanding general obligation or revenue bonds (chapter 39.53 RCW). The use of a refunding mechanism is often driven by the desire to lower interest rates and reduce payment amounts on older, more expensive debt.
What is a crossover refunding?
Crossover refunding refers to the issuing of a new bond where the proceeds are placed in escrow to redeem a previously issued higher-interest bond.
What is a pre refunded bond?
A pre-refunding bond is a debt security that is issued in order to fund a callable bond. With a pre-refunding bond, the issuer decides to exercise its right to buy its bonds back before the scheduled maturity date.
What is an escrow advance?
An escrow advance represents the additional funds paid on behalf of the borrower by the servicer when there are insufficient funds in the escrow account to satisfy the entire payment of an escrow account item that has come due.
What happens to escrow money when selling?
Your mortgage escrow account pays your homeowner’s insurance and property tax bills. When you sell your home and close, you don’t have to pay those bills anymore. As such, your escrow account goes away and you will get a check from your lender for the balance.
What does escrow advance mean?
Escrow Advance Law and Legal Definition. Escrow advance is the disbursement for escrow expense that is paid along with servicer funds at time when insufficient funds in borrower’s escrow account.
What are escrow rules?
The Escrow Rule requires lenders to establish escrow accounts for certain mortgage transactions to help ensure that consumers set aside funds to pay for certain expenses (property taxes, premiums for homeowners insurance, and other mortgage-related insurance).
What is an escrow payment?
In the U.S., escrow payment is a common term referring to the portion of a mortgage payment that is designated to pay for real property taxes and hazard insurance. It is an amount “over and above” the principal and interest portion of a mortgage payment.