One of the changes announced last month was to print “NO” for the question “Can this amount increase after closing?” in the payment row of the Loan Terms section of the LE and CD if the payment cannot increase. To accomplish this, the amount printing for the initial “Monthly Principal & Interest” in the Loan Terms section of each form was compared with the maximum payment amount on the loan.
For some clients using field values imported from their Loan Origination System to populate the Projected Payments table for construction to permanent loans, the permanent principal and interest payment was printing for the “Monthly Principal & Interest” amount instead of the construction interest only payment. When compared to the maximum monthly payment for fixed rate loans, this resulted in “NO” printing for the question “Can this amount increase after closing?”, since the permanent payment amount was the maximum monthly payment on the loan.
The Loan Estimate (Cx18565) and Closing Disclosure (Cx18566) have been modified for all construction and construction to permanent loans to print the construction interest only monthly payment amount in the Loan Terms section for the “Monthly Principal & Interest” amount.
- For construction loans with interest charged on the full amount of the loan, the calculation of the monthly construction interest payment is as follows:
Loan Amount * Interest Rate / 12 months = construction interest only monthly payment amount
- For construction loans with interest charged on the amount advanced, the calculation is based on half of the Loan Amount, as follows:
Loan Amount / 2 * Interest Rate / 12 months = construction interest only monthly payment amount
The construction interest only monthly payment amount calculated above will then be compared to the maximum monthly payment on the loan to determine if “YES” or “NO” prints in the “Can this amount increase after closing?” column.
This change will be in effect on April 8, 2016. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
DR 196269