Initial Buydown P&I Payment on Loan Estimate and Closing Disclosure
In ConformX, “Buydown Federal Disclosure Behavior” (field 51919) determines if a temporary buydown is reflected on the Loan Estimate and Closing Disclosure (LE/CD). This field has three field options:
- If “Do Not Reflect Buydown On TIL” is selected, then the temporary buydown is not reflected in the Product, Loan Terms or Projected Payments tables, or related calculations on the LE/CD.
- If “Disclose Rate Increase and Payment Increase” is selected, both the bought down rate and bought down payment are disclosed on the documents. The loan is disclosed as a Step Rate loan. This means “YES” prints for the question “Can this amount increase after closing?” for both the Interest Rate and Monthly Principal & Interest, and the Adjustable Interest Rate (AIR) table prints on the LE/CD.
- If “Disclose Payment Increase Without Rate Increase” is selected, the bought down payment is disclosed on the documents. The loan is disclosed as a Step Payment loan. This means “YES” prints for the question “Can this amount increase after closing?” for the Monthly Principal & Interest, and the Adjustable Payment (AP) table prints.
For loans with a temporary buydown, each level of the buydown is traditionally in place for 12 months. Temporary buydowns with an initial buydown period of 12 months or more and buydowns set to “Do Not Reflect Buydown On TIL” are already filling out the LE/CD as required.
By client request, temporary buydowns with initial periods less than a year will now be supported on the Loan Estimate and Closing Disclosure when “Disclose Rate Increase and Payment Increase” or “Disclose Payment Increase Without Rate Increase” are selected. The only changes required to the LE/CD are to disclose a bought down payment amount for the Monthly Principal & Interest in the Loan Terms section, therefore triggering “YES” for “Can this amount increase after closing?”.
If a payment change can occur during the first year of the loan, the Principal & Interest payment row in the Year 1 column of the Projected Payments table on the Loan Estimate and Closing Disclosure is already disclosed as a range, and the AP/AIR tables are already filling out correctly.
Buydown Indicator in FNMA Fixed Rate Programs
Also by client request, the following programs under Fannie Mae will no longer have the “Buydown Indicator” (field 471) set to “No”:
- 81680 Conventional Fixed
- 82110 FHA Fixed
- 82111 VA Fixed
This change will allow these three programs to be used for loans with temporary buydowns as well those without. If the “Buydown Indicator” is empty, it will still be globally set to “No” if the first buydown period is empty.
These corresponding fixed rate Fannie Mae buydown programs will NOT be changed, and will continue to have the “Buydown Indicator” set to “Yes”:
- 87192 Conventional Fixed with BUYDOWN
- 88970 FHA Fixed with BUYDOWN
- 88885 VA Fixed with BUYDOWN
The changes to the LE/CD to trigger the bought down payment in the Monthly Principal & Interest row when applicable, and the changes to three FNMA programs, are currently available on ConformX Stage servers and will be moved to Production on February 17, 2017.
If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 218068 and TW 172323