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#2233303 - 03/19/20 04:16 PM skip payments
BankerBobby Offline
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BankerBobby
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Anyone have a form for mortgage customers to skip payments they'd like to share?

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#2233305 - 03/19/20 04:19 PM Re: skip payments BankerBobby
rlcarey Online
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rlcarey
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Galveston, TX
To many loan types and State laws. Contact your legal counsel.
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#2233307 - 03/19/20 04:30 PM Re: skip payments rlcarey
BankerBobby Offline
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True, do most ppl use a software vendor like their loan platform to generate a form or use a paper form?

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#2233310 - 03/19/20 04:57 PM Re: skip payments BankerBobby
rlcarey Online
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rlcarey
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Most banks will use whatever processes that has been vetted by their legal counsel. It could be either.
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#2233315 - 03/19/20 06:00 PM Re: skip payments BankerBobby
Richard Insley Offline
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Toano, VA
A "skip payment form" is a type of modification agreement--an amendment to your loan contract. "Skipping" a payment in a simple interest loan involves more than bumping due dates forward in time. More interest will accrue and need to be paid somehow. How will it be paid? When?
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#2233349 - 03/19/20 11:41 PM Re: skip payments Richard Insley
donnac Offline
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I'm not the original poster but I'd like to tag on a question.

If we do a skip payment program on non-residential loans as follows:
- no principal or interest payments for 3 months,
- extend maturity date 3 months,
- accrue interest,
- at month 4 when they start to make payments, the normal P & I payment may not cover all the accrued interest. (The accrued interest that hasn't been paid stays in the accrued interest bucket and is NOT added to principal). The loan system will continue to credit accrued interest before principal with the payments.

They're paying more interest over the life of the loan because of the 3 month deferral. But at maturity, the loan should be fully amortized.

Am I correct that this structure is NOT considered a non-amortizing loan?

Thanks.

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#2233350 - 03/20/20 02:38 AM Re: skip payments BankerBobby
Richard Insley Offline
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Toano, VA
If "non-amortizing loan" is defined anywhere, then that's your authority. If non, then what you describe is a non-amortizing loan--at least for the time when the interest clock is running but no payments are required. "Non-amortizing" is not to be confused with negatively amortizing. The accrual method you describe is the U. S. Rule and neg am is the distinguishing difference between that and the actuarial method.
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#2233351 - 03/20/20 11:31 AM Re: skip payments Richard Insley
donnac Offline
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Richard,

Yes, I meant to ask about negative amortization instead of non-amortizing. Thank you for catching my mistake.

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#2233580 - 03/24/20 06:10 PM Re: skip payments BankerBobby
mdog76 Offline
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Also tagging on to this thread, but what issues or disclosures will be needed if we allow customers to skip payments on mortgage loans during this time?

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#2233586 - 03/24/20 06:44 PM Re: skip payments BankerBobby
rlcarey Online
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Galveston, TX
None - if that is all you are doing - outside if you are extending the maturity - the Notice of Special Flood Hazards if the property is in a flood zone.
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#2233587 - 03/24/20 06:53 PM Re: skip payments BankerBobby
mdog76 Offline
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So for arguments sake, if we allow the customer to skip a payment for 90 days and tack on to the end, would that constitute a balloon payment requiring new disclosures? Or what if we just extended the maturity?
Last edited by mdog76; 03/24/20 06:54 PM.
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#2233589 - 03/24/20 07:02 PM Re: skip payments BankerBobby
rlcarey Online
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rlcarey
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Galveston, TX
What you do is a business decision and how you do it is up to your legal counsel. If you are not adding or changing a variable rate feature on the loan, it is not a refinance under 1026.20(a).
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#2233591 - 03/24/20 07:05 PM Re: skip payments BankerBobby
mdog76 Offline
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That's what I was looking for. Thanks for the help.

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#2233616 - 03/25/20 10:49 AM Re: skip payments BankerBobby
Richard Insley Offline
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Toano, VA
Your question was "what issues?" Randy provided an answer about TIL and flood ins is mentioned farther back. There may be other issues, including state law and investor requirements (if the loans are sold or you intend to sell them.)
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#2234014 - 03/31/20 09:07 PM Re: skip payments BankerBobby
davidm Offline
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Texas
For non-real estate secured loans, to defer a payment when there are 2 co-borrowers is a signature required authorizing the deferment by a borrower or must both parties approve?

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