Last year net interest margin (NIMs) activity was robust, but views are mixed on the future of the market. As regulators continue zeroing in on lending abuse, lenders could be forced to pare down the use of prepayment penalties, currently the strongest cash flow to a NIM.

In the late 1990s, several NIMs failed. Back then they were structured with longer average lives and did not capture prepayment penalties. Incorporating the penalties into the structure acts a "natural" hedge.

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