How is the prepayment calculation figured on fixed rate and amortizing advances?
The prepayment of fixed rate advances, including amortizing, is based upon the return or yield we can obtain when reinvesting the funds in the open market in comparison to the advance rate being charged on the advance. The prepayment fee is priced live to the market using the yield of a U.S. Treasury on advances prior to 2001, or the yield of an FHLBank bond. The stockholder will be charged the difference between the advance rate and re-investment rate for the remaining period to maturity. If the re-investment rate is greater than or equal to the advance rate, no fee will be charged.
