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#1899582 - 02/25/14 12:32 PM Balloon Loans with 62 month Term
FNB Offline
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Joined: Feb 2014
Posts: 36
We qualify as a small creditor and only portfolio balloon loans. We changed our product to be a 62 month term to not have to include the balloon for teh DTI calculation and are now having troubles calculating the spread for the HPML test as it only allows whole years.
Anyone else having this issue or have a work around?

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#1899605 - 02/25/14 02:21 PM Re: Balloon Loans with 62 month Term FNB
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
You should use 5 years as your term, as it is the closest whole term:

The lender should use the number of whole years closest to the actual term; if the actual term is exactly halfway between two whole years, the lender should use the shorter of the two. For example, for a loan term of 10 years and three months, enter in the rate spread calculator (or choose the column of the appropriate average prime offer rate table corresponding to) 10 years; for a loan term of 10 years and nine months, enter (or choose the column for) 11 years; for a loan term of 10 years and six months, enter (or choose the column for) 10 years. If a loan term includes an odd number of days, in addition to an odd number of months, the lender first should round to the nearest whole month, again rounding down if the number of odd days is exactly halfway between two months.
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#1899606 - 02/25/14 02:23 PM Re: Balloon Loans with 62 month Term FNB
dblack Offline
Gold Star
Joined: Feb 2008
Posts: 263
AL
In that case you would use 5 years.

From the "info" section on the FFIEC calculator page:

What term should a lender use to find the average prime offer rate for a comparable transaction when the loan’s term to maturity (or, for an adjustable-rate loan, the initial fixed-rate period) is not in whole years?

◦ The lender should use the number of whole years closest to the actual term; if the actual term is exactly halfway between two whole years, the lender should use the shorter of the two. For example, for a loan term of 10 years and three months, enter in the rate spread calculator (or choose the column of the appropriate average prime offer rate table corresponding to) 10 years; for a loan term of 10 years and nine months, enter (or choose the column for) 11 years; for a loan term of 10 years and six months, enter (or choose the column for) 10 years. If a loan term includes an odd number of days, in addition to an odd number of months, the lender first should round to the nearest whole month, again rounding down if the number of odd days is exactly halfway between two months
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