Curtailment
Curtailment is the act of restricting or reducing something or cutting it short. Despite its common use to describe business cutbacks and power restrictions, consumers are most likely to come across the word curtailment in the fine print in mortgage paperwork. The word _curtailment_ can be applied to a deliberate restriction or reduction placed on any activity, and it has become common usage in referring to business operations. Principal curtailment of a mortgage occurs when a borrower makes an extra payment against the principal owed in order to reduce the outstanding balance. The word curtailment is also commonly used by energy companies to describe a reduction in deliveries to customers due to a temporary shortage of supplies.
What Is Curtailment?
Curtailment is the act of restricting or reducing something or cutting it short. The word is often used in business announcements and has several uses in the mortgage industry:
Understanding Curtailment
The word curtailment can be applied to a deliberate restriction or reduction placed on any activity, and it has become common usage in referring to business operations.
A company may impose a curtailment on production in response to short-term market conditions. This is particularly common in the oil and gas industry, which has to respond quickly to changes in supply and demand.
A company may opt for a curtailment on some of its business activities in response to financial troubles. This may involve shutting down some parts of its operation temporarily or permanently in order to concentrate on the core business.
A curtailment indicates a reduction, temporary or permanent, in a level of production.
The word curtailment is also commonly used by energy companies to describe a reduction in deliveries to customers due to a temporary shortage of supplies.
A number of recent news stories have been related to announced curtailments, including the following:
Despite its common use to describe business cutbacks and power restrictions, consumers are most likely to come across the word curtailment in the fine print in mortgage paperwork.
In that context, at least, a curtailment is always a good outcome for the consumer.
Related terms:
60-Plus Delinquencies
60-plus delinquencies are home loans that are more than 60 days past due on their monthly mortgage payments. read more
Common-Pool Resource
A common-pool resource is an open-access resource susceptible to overexploitation because people have an incentive to consume as much as they want. read more
Customer
A customer is an individual or business that purchases the goods or services of another business. read more
Forbearance
Forbearance is a form of repayment relief involving the temporary postponement of loan payments, typically for home mortgages or student loans. read more
Law of Supply & Demand
The law of supply and demand explains the interaction between the supply of and demand for a resource, and the effect on its price. read more
Layoff
A layoff occurs when an employer suspends or terminates a worker, either temporarily or permanently, for business rather than performance reasons. read more
Mergers and Acquisitions (M&A)
Mergers and acquisitions (M&A) refers to the consolidation of companies or assets through various types of financial transactions. read more
Prepayment Privilege
A prepayment privilege extends a right to a debt holder to pay all or part of a debt prior to its maturity or ahead of schedule, usually without penalty. read more