I completed a real estate audit and found six significantly understated APRs for ARM loans. I use a software called brooks, which I'm not sure they make it anymore but I love it and is great for doing arm/const/pmi loans. The six loans were signifcantly understated due to the second adjustment period using an incorrect index, for instance .032 was used instead of .32. So I know they are reimbursable. You have to use APR win to do the reimbursable calculation. The problem is you put in the disclosed second payment stream from the TIL, it is assuming it is accurate and with these loans it is not. If I do the disclosed payment stream, then no issue, but if do the actual second payment stream from brooks, my calculation comes up exactly right both finance charge and APR understated with a reimbursement aamount given. This is a major flaw in the OCC program in my opinion, the only real way you get a violation is if the amount financed is understated, at least for ARM loans. I'm torn because if use the OCC's program no violation, but I know they are understated if I use the Brooks program. What are your thoughts, anyone I should contact about this OCC or I am just wrong on this. Hope this makes sense.

I'm not sure I follow this completely.

Were these discounted ARMs where the second payment stream is calculated incorrectly and disclosed at consummation or was the index incorrectly entered when the rate changed? If the latter you have a contract issue that is in favor of the borrower and before adjusting the index I would talk to your attorney.

To use APRWin, you would have to calculate the correct payment streams (according to the legal obligation) and enter them but enter the APR and finance charges disclosed on the TIL being tested. The original TIL is probably accurate based on the erroneous information entered to calculate the payment stream and APR, that is why APRWin is not giving you an error. As the old saying goes, garbage in, garbage out.

Also check the contract to be sure you didn't contract for the .032. If you did you most likely are going to have to honor that contract.

Dan, thanks for the response. The Loan originator entered .032 as the index when setting up the loan on easy lender when they should have entered .32. That is enough to through it off significantly. But it makes sense what you say about calculating second payment stream according to the contract, because if I did the math that why instead of my own software, I would get the same result that I am getting.

Garbarge in garbage out is right!