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#2128451 - 04/28/17 08:18 PM Range of payments-Interest difference-days/month
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Our new loan software is providing a range of payments in a single column for a fixed rate 11 month interest only loan with principal due in the 12 month. This range is due to days in a month, lowest payment is 28 days of interest, highest payment is 31 days of interest.

1026.37(c)(1)(iii) outlines when we are required to provide a range of payments - basically if we run out of columns and there is triggering events that must be disclosed and so may have to be disclosed the same column, multiple events happen in the same year or initial year and when payments adjust based on adjustable rates changes. It references back to 1026.37(c)(1)(I)(A) and the official interpretations for that section say minor payment variations resulting solely from the fact that months have different numbers of days are not changes to periodic principal and interest payments; but that a change from interest only to payments that do not defer principal are a trigger requiring separate disclosure.

1026.17(c)(3)(iii) says we can disregard the effects of months that have different number of days when making calculations and disclosures.

So while it can be disregarded and is not a requirement for separate disclosure, is it permissible that the software vendor has set the projected payment columns to provide a range of payments in a single column for the number of days in a month?
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TRID - TILA/RESPA Integrated Disclosures Rule
#2128490 - 05/01/17 12:31 PM Re: Range of payments-Interest difference-days/month Likes to Comply
RR Joker Offline
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My [TRID} software, even for IO construction loans, never discloses ranges. I believe the following is why, due to TRID rules, it's not applicable:

3. Interest only. In a loan that contains an interest only feature, periodic principal and interest payments may change for purposes of ยง 1026.37(c)(1)(i)(A) when the interest only period ends, meaning the consumer must begin making payments that do not defer repayment of principal.

Typically, mine will be 'only interest' and then a final balloon.
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#2128497 - 05/01/17 12:56 PM Re: Range of payments-Interest difference-days/month RR Joker
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We have two columns also, but in the first column for Year 1 they disclose a range of the min and max payment and the change is only due to number of days in the month. The CFPB's interest only, adjustable rate example doesn't show a payment range in the first column during the time the payment is interest only.

I'm trying to ensure that we aren't prohibited from disclosing the Principal & Interest payment range in this manner. Do you think its a non-issue?
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#2128498 - 05/01/17 01:00 PM Re: Range of payments-Interest difference-days/month Likes to Comply
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Principal & Interest
Year 1
$1,104 min
1,223 max
only interest

Final Payment
$304,322.78
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#2128499 - 05/01/17 01:08 PM Re: Range of payments-Interest difference-days/month Likes to Comply
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I know my software vendor vehemently defended not showing a range (they show one on non-TRID IO loans) because they are sticklers for following the rule precisely and have a close relationship with the CFPB, it would seem.

I personally think the range is a good thing. I find it hard to imagine that any examiner would take it to the extreme, but you just never know. A very strict reading of the regulation would lead you to believe you have no basis for disclosing it.

Because of construction loans, where the range can be extreme...I ended up putting a NOTICE on my cover letter to explain how the interest payment REALLY works.

But to answer your question on 'is it prohibited', I just really can't say for sure. frown
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#2128503 - 05/01/17 01:35 PM Re: Range of payments-Interest difference-days/month Likes to Comply
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Thanks very much for your help!!!
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#2128504 - 05/01/17 01:39 PM Re: Range of payments-Interest difference-days/month Likes to Comply
rlcarey Offline
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Most choose this route, but not choosing this route is not a violation as it does say "may":

1026.17(c)(3) The creditor may disregard the effects of the following in making calculations and disclosures.

(iii) That months have different numbers of days.
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