The ConformX software release on January 13, 2012, will support three different ways to disclose temporary interest buydowns on the Truth-in-Lending Disclosure Statement.
A new field called “Buydown Truth-in-Lending Behavior” will be prompted for on the Mandatory Fields screen for all loans with a temporary interest rate buydown.
- If “Disclose Payment Increase Without Rate Increase” is chosen as the “Buydown Truth-in-Lending Behavior”, the full interest rate will be reflected on the TIL in the “Introductory Rate & Monthly Payment” column, along with the bought down payment amount. The “Interest Rate and Payment Summary” section on the TIL will then reflect the first payment increase up to the second bought down payment amount in the “First Increase” column, similar to the table used for Interest Only loans. The Good Faith Estimate and HUD-1 Settlement Statement will reflect the full interest rate in the “Summary of your loan” and “Loan Terms” sections for the initial interest rate, will mark that the payment can increase after the first buydown period ends, and will print the first increase in payment along with the maximum payment amount.
- “Disclose Rate Increase and Payment Increase” will reflect the first bought down rate and corresponding bought down payment in the “Introductory Rate & Monthly Payment” column of the “Interest Rate and Payment Summary” section, which will look like an ARM table. The “Maximum Ever” column (and in most cases the “Maximum During First Five Years” column, depending on the length of the buydown) will reflect the full interest rate and payment after the buydown period ends. The GFE and HUD-1 will reflect the bought down rate and payment in the “Summary of your loan” and “Loan Terms” sections for the initial interest rate and payment, will mark that both the rate and payment can increase after the first buydown period ends, and will print the full interest rate and full payment amount for the corresponding “maximum” values.
- “Do Not Reflect Buydown On TIL” will trigger the “Interest Rate and Payment Summary” section of the Truth-in-Lending Statement to look like there is no interest rate buydown at all. The GFE and HUD-1, along with the payment schedule used to calculate the Annual Percentage Rate, Finance Charge, and Total of Payments on the TIL, will not reflect the bought down rate or payment.
The DocuTech article “Buydown Disclosure Requirements 2011” contains additional information regarding disclosing temporary interest rate buydowns on the Truth-in-Lending Statement.
January 13, 2012