By the Numbers
Prepayment and extension protection with Florida pools
This material is a Marketing Communication and does not constitute Independent Investment Research.
Florida loans continued to offer prepayment protection during the recent period of low mortgage rates, with S-curves comparable to low loan balance pools with maximum loan sizes of $250,000, but the Florida pools can be available for a lower pay-up to TBA. The prepayment protection continues despite a recent court ruling that could allow some mortgage refinances to avoid paying Florida’s mortgage recording taxes. Lenders may be unlikely to pass the tax savings to borrowers. Seasoned Florida loans also offer extension protection, but that may be weaker for recent originations.
Loans from Florida exhibited prepayment protection relative to comparable loans from other states during the refi wave that started in October (Exhibit 1). The graph compares loans with six to 24 months seasoning and original loan sizes between $300,000 and $600,000 in Florida to the same seasoning and balance loans in other states (excluding New York and Texas, which are also typically pooled separately). The Florida loans were consistently slower when in-the-money; at the peak, the Florida S-curve reached around 35 CPR while the generic S-curve hit nearly 55 CPR. The Florida S-curve was comparable to an S-curve of loans with original balances between $225,000 and $250,000.
Exhibit 1. Recent production Florida S-curves during recent refi wave
Performance from October 2025 through February 2026. Fixed rate 30-year loans, owner occupied, Orig FICO≥700, Orig LTV ≤80, 6 to 24 WALA.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
The prepayment protection has persisted despite an October court ruling that Bank of America did not need to pay Florida’s two mortgage recording taxes—the 35 bp stamp tax and the 20 bp non-recurring intangible tax—for loans it refinanced. Going forward, if lenders can refinance loans without paying those taxes and pass the savings to the borrower, it could boost the refinance incentive for Florida borrowers by 14 to 27 bp (assuming 4x and 2x IO-multiples, respectively).
However, the ruling may not have much effect on prepayment speeds. It may only be possible to avoid the taxes for refinances with the existing lender, and that makes it unlikely the lender will pass those savings to the borrower. To avoid re-paying the stamp tax the lender must attach documentation that the stamp tax was previously paid, which could be difficult if it was paid by a different lender. And the intangible tax can only be waived for same-lender refinances. Lenders often retain savings like these when they are only available in same-lender refinances. For example, New York borrowers exhibit strong prepayment protection from the state’s mortgage recording taxes despite being able to avoid it using the CEMA process, which requires the cooperation of the existing lender.
Pay-ups for recent Florida loans are currently a little less than the pay-ups for the max $250k loan balance pools. For example, Bloomberg’s BVAL on March 12 showed a $1-09+ pay-up for FNCL 5.5% 2026 Max $250k and $1-03 for the same coupon and vintage Florida. This may indicate the market has a small concern that the court ruling could lift Florida speeds, or it could be recognition that recent Florida loans may not offer extension protection if rates increase. But it would be cheaper call protection if mortgage rates were to fall.
Florida home prices have been largely unchanged for the last few years (Exhibit 3). This plots the cumulative home price appreciation against WALA; WALA runs from high to low so that older loans are on the left. Most loans in the state originated in the last few years have experienced no appreciation, or even slight depreciation. This likely explains why recent loans are prepaying more slowly than generic and low loan balance loans when out-of-the-money.
Exhibit 2. Cumulative home price appreciation varies sharply by HPA
Using November 2025 home price index data. Source: Case Shiller, Santander US Capital Markets.
Seasoned Florida loans, like those originated during 2020 and 2021, have had significant price appreciation. Loans originated in 2020 have gone up over 60%. The higher home values, and associated increase in home equity, give these borrowers the flexibility to move. Some may also have moved to Florida during the pandemic and now, with more return-to-office mandates, be relocating out of the state. And Florida borrowers are also grappling with high hazard insurance and property taxes, which increases monthly mortgage payments. Borrowers that cannot afford the higher payments may have to move.
S-curves for seasoned loans over the last few months show that Florida loans do tend to prepay a little faster when out-of-the-money (Exhibit 3). And they continue to have refinance protection when in-the-money, although the number of loans in this category is small so the S-curves are somewhat noisy.
Exhibit 3. Seasoned Florida loans offer extension and prepay protection
Performance from October 2025 through February 2026. Fixed rate 30-year loans, owner occupied, Orig FICO≥700, Orig LTV ≤80, 36 to 60 WALA.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
Pay-ups for Florida loans have been a little higher than max $250k pools in discounts, likely due to the better extension protection exhibited by Florida in the S-curves. For example, BVAL currently shows a pay-up of $1-05 for 3.0% 2021 FL and $1-01+ for 3.0% 2021 Max $250k.
Florida loans also prepaid comparably to loans with original loans sizes between $225,000 and $250,000 during the pandemic (Exhibit 4). Speeds were overall much faster during 2020 and 2021 than they are today, but the Florida and low loan balance S-curves are nearly identical. Max $250,000 pools have been a good reference for Florida pools for several years.
Exhibit 4. Florida S-curves for 6 to 24 WALA loans in 2020 and 2021.
Performance in 2020 and 2021. Fixed rate 30-year loans, owner occupied, Orig FICO≥700, Orig LTV ≤80, 6 to 24 WALA.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
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