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The phrase "pre-payment risk" is an oxymoron; when someone pays off their loan early due to a pre-payment, there is no risk. You've (the bank / person who loaned out the money to the borrower) got ALL of your principle back PLUS all of your interest to date as well as ALL of your fees (fees which would have normally been budgeted to cover a much longer time-frame, in fact). Moreover, you or someone else is making NEW money on the new fees for the re-finance/pre-payment.

Sure, you might be getting less overall interest, but it is a FACT that you are getting more in fees as well as 100% of your original principle back.

Ergo, no "risk".

It does give me a good chuckle though when I hear someone claim that getting your money back early is a "risk", though!

It does give me a good chuckle though when I hear someone claim that getting your money back early is a "risk", though!

When debt to equity is 60 to 1 and you have an enormous illiquid derivatives hedging operation EVERYTHING is a risk.

BPT is doing great, as is DOM, PWI, and PVX. DOM is a personal favorite of mine simply because it is a local Alabama trust based upon abandoned coal mines along the Warrior River basin. By injecting water, the coal seams produce natural gas in marketable quantities, earning a nice 10% dividend check for its shareholders (something that every BPT owner can likewise appreciate). Who would have thought, some 20 years ago, that there was real money in abandoned coal mines?!

Life is good!

And even a gloomster can justify owning them as an inflation hedge.

Life is not utterly unbearable!