Index
Input the current index rate for this loan. You can input up to four decimal places.
Conversion Option
Check this box to indicate if the loan contains a conversion option.
Margin
Input the percentage rate of the margin for this loan. You can input up to four decimal places.
Conversion Fee
For ARM loans with a conversion option, input the dollar amount of the conversion fee for the loan.
Index Date
Input the date on which the index interest rate was published. Dates can be input by typing the date in an MM/DD/YYYY format.
Conversion Percent
For ARM loans with a conversion option, input the loan's conversion percent.
ARM Plan (Optional)
Input the ARM plan, if this field applies. (This field is not used by most companies.)
Note Information
Floor
If applicable, input the lowest rate to which this loan can fall over the life of the loan. You can input up to four decimal places. The standard FNMA/FHLMC documents do not allow floors. A lender would need to create custom documents to have a floor. DO NOT INPUT THE MARGIN AS THE FLOOR - the standard notes are programmed not to fall below the margin of the loan. In order to input a floor, the investor must have a custom note programmed with DDSI. Floors do not apply for FNMA ARM loans.
Term Cap
Input the maximum percentage rate by which interest can increase over the life of the loan. You can input up to four decimal places. This number is typically between 5.0000 and 7.0000 percent. The Term Cap plus the Note Rate (or Fully Indexed Rate, when applicable) equals the Lifetime Cap.
FHA FYI: For FHA loans, the Term Cap MUST be entered as 5.0000%.
Lifetime Cap
This field displays the maximum rate allowed for the loan, resulting from the Note Rate (or Fully Indexed Rate, when applicable) plus the Term Cap.
1st Adjustment Period
This section includes data about the first adjustment of the interest rate.
Interest Change Term
Input the number of months until the first interest rate change occurs. The value in this field will determine the interest change date.
Adjustment Up
Input the percentage that the interest rate can increase at the first interest rate change date. You can enter up to four decimal places.
FHA FYI: For FHA loans, the Adjustment Up percentage MUST be entered as 1.0000%.
Adjustment Down
Input the percentage that the interest rate can decrease at the first interest rate change date. You can enter up to four decimal places.
FHA FYI: For FHA loans, the Adjustment Down percentage MUST be entered as 1.0000%.
Interest Change Date
The Interest Change Date is determined by the difference of the First Payment Date and the Term as input under the 1st Adjustment.
FHA FYI: For FHA loans, the interest change dates must be January 1, April 1, July 1, or October 1, and should always be between 12-18 months out from the Funding Date.
Periodic Adjustments
Input data about periodic adjustments (after the first adjustment) of the interest rate.
Interest Change Term
Input the number of months between adjustments.
FHA FYI: For FHA loans, the Periodic Adjustment Term MUST be entered as 12.
Adjustment Up
Input the percentage that the interest rate can increase at any adjustment. You can enter up to four decimal places.
FHA FYI: For FHA loans, the Adjustment Up percentage MUST be entered as 1.0000%.
Adjustment Down
Input the percentage that the interest rate can decrease at any adjustment. You can enter up to four decimal places.
FHA FYI: For FHA loans, the Adjustment Down percentage MUST be entered as 1.0000%.
Pay Option and Payment Cap ARM Information
Payment Type (1st Adjustment Period)
Select the Payment Type from the pull-down menu that applies to the initial fixed payment period of your loan. Your options for Payment Type include:
- (blank)
- Effective Rate (P&I)
- Effective Rate (IO)
- Discounted Rate (P&I)
- Discounted Rate (IO)
- Stated Min Rate (P&I)
- Stated Min Rate (IO)
- Reduction of Pmt (Rate in Effect (P&I))
- Reduction of Pmt (Fully Index Rate (P&I))
Payment Adjustment Term (1st Adjustment Period)
Input the number of months until the first payment change occurs. The value in this field will determine the payment change date.
Minimum Percent (1st Adjustment Period)
For loans where the borrower's payment is subject to a Minimum Payment, enter the first minimum percent amount that will be used to calculate the borrower's payment. You can input up to four decimal places.
Example 1 (Payment Type = Stated Min Rate): During the initial 60 months of the loan, the Full Note Rate of the loan is 6.5%. However, the borrower's minimum monthly payment will be calculated using a fixed minimum payment rate of 3.0%. In this case, the user would input 3.0%.
Example 2 (Payment Type = Reduction of Pmt (Rate in Effect(P&I)): During the initial 60 months of the loan, the borrower's monthly payment will be reduced by 40% of the fully amortized payment. In this case, the user would input 40% (the payment reduction percentage amount).
Example 3 (Payment Type = Discounted Rate): During the initial 60 months of the loan, the borrower's monthly payment amount will be calculated by subtracting a 5.0% discount from the Full Note Rate of 8.5%. In this case, the user would input 5.0%.
Payment Recast Months
For loans with potential negative amortization, input the number of months when the new minimum payment will be established.
Interest Only Payment for Balance Cap Violation
For loans with potential negative amortization, check this box to indicate that upon exceeding the unpaid principal balance limit, interest only payments will be paid until the Full Payment is required.
Payment Type (Periodic Adjustments)
Select the Payment Type from the pull-down menu that applies to the subsequent fixed payment period(s) of your loan. Your options for Payment Type include:
- (blank)
- Effective Rate (P&I)
- Effective Rate (IO)
- Discounted Rate (P&I)
- Discounted Rate (IO)
- Stated Min Rate (P&I)
- Stated Min Rate (IO)
- Reduction of Pmt (Rate in Effect (P&I))
- Reduction of Pmt (Fully Index Rate (P&I))
- Payment + Payment Adj
Payment Adjustment Term (Periodic Adjustments)
Input the number of months between payment adjustments.
Minimum Percent (Periodic Adjustments)
For loans where the borrower's payment is subject to a Minimum Payment, enter the periodic minimum percent amount that will be used to calculate the borrower's payment. You can input up to four decimal places.
Example 1 (Payment Type = Stated Min Rate): During the initial 60 months of the loan, the Full Note Rate of the loan is 6.5%. However, the borrower's minimum monthly payment will be calculated using a fixed minimum payment rate of 3.0%. In this case, the user would input 3.0%.
Example 2 (Payment Type = Reduction of Pmt (Rate in Effect(P&I)): During the initial 60 months of the loan, the borrower's monthly payment will be reduced by 40% of the fully amortized payment. In this case, the user would input 40% (the payment reduction percentage amount).
Example 3 (Payment Type = Discounted Rate): During the initial 60 months of the loan, the borrower's monthly payment amount will be calculated by subtracting a 5.0% discount from the Full Note Rate of 8.5%. In this case, the user would input 5.0%.
Payment Cap
This field is only used with a Payment Cap payment plan. If applicable, input the maximum percentage rate by which the payment itself (not the interest rate) can change. You can input up to four decimal places.
This payment cap is seen only on ARMs with potential negative amortization, and is usually 7.5000%. This is not the life cap.
Balance Cap (also known as Negative Amortization Cap, Negative Amortization Limit & Negative Amortization Ceiling)
For loans with potential negative amortization, input the maximum percentage amount that the unpaid principal balance can never exceed.
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