This is another reimbursement situation, and it's a biggee.

This is a 12-month rescindable loan for $266,250, payments are interest-only monthly, all prin and remaining interest due at maturity. Unfortunately, $4,008.50 in prepaids were not disclosed. The reimbursement is awful - $3,613 using a .25 tolerance. The customer has made no payments to date.

In the APRWIN payment stream field, is it correct to enter just one payment stream in the amount of all interest and principal of $283,556.27? I'm almost certain that is the only way I can run it, but because the reimbursement amount is so high I would very much appreciate some reassurance I'm thinking straight.

IMHO, if monthly interest is required, you would have 11 payments of interest and the last one of interest and principal. If the interest is on a 30/360 basis, calculate the annual and divide by 12 for the monthly amount.

How do you plan to explain to the affected customer that you have decided to "keep the tolerance?"

Isn't the tolerance calculated with .125% instead of .25% because it is a regular transaction? A regular transaction being one stream of steady payments with a different final payment? I found some 7 and 5 year balloons (not-interest only) and I was planning to use the .125% tolerance.

The issue is not which percentage applies, but rather how you tell the affected customer that you decided to screw him or her out of the tolerance amount you kept. Also, by reimbursing a net amount, you do not erase your civil liability under Section 130(a) of the TIL Act. To cure the violation and eliminate the possibility of legal penalties, Section 130(b) requires a full reimbursement.