I'm looking for any experienced Encompass users to answer a question for me. Have a client that insists that Encompass ignores odd first days when calculating APRs. (This would be the APR allowed by 1026.17 (c) (4).)They still do the prepaid interest, etc. but use one unit period and zero days for the APR. I know that this can't be and that it must be a setting somewhere in the system. They insist that there isn't a setting like that. So, I'm asking, am I right? Is there a setting for this? Where would they find it?

Which "this" do you mean? As you said earlier in the post, Section 1026.17(c)(4) permits lenders to ignore (up to stated limits) odd days.

I know that using 1026.17 (c) (4) is allowed as it always results in an APR higher than using the actual Fed calendar figures. I assume that Encompass produces the latter APR and that some setting must control which APR is produced. That is the "this" to which I refer.

What suddenly dawned on me is that the setting is probably Actuarial vs. US Rule method of APR calculation.

Only when there are long odd days. For loans with short odd days, the APR permitted by Section 1026.17(c)(4) is lower than the exact APR.

Not likely. Appendix J provides equations and examples for the actuarial method--just what a creditor will need to present a legal defense. It does not provide the details and illustrations for the US Rule method--making for an uncertain defense. Even if the loan payments are calculated by the US Rule, the safer choice for the APR calculation is always the actuarial method.