APR

Posted By: Anonymous

APR - 08/14/01 07:33 PM

I am conducting a loan review, and as part of that, I recalculate the APR's on APR Win. I have one where I am inputting exactly what is in the Fed Box, but the APR I am getting on APR Win is different. These are Laser Pro docs. Any idea why this would be happening? I'm not sure where to begin looking for the problem. This particular loan has 5 monthly payments with a balloon.
Posted By: De Vonne

Re: APR - 08/14/01 07:43 PM

Could be a couple of things. First, check the amount financed, make sure the pre-paids are calculated right. Also, take a look at the number of payments. Do you have 5 payments then one final payment of principal and interest; or do you have 6 payments and one payment of principal only?

Or, it could be that the Laser Pro document is just wrong. Remember, garbage in, garbage out.

Posted By: Anonymous

Re: APR - 08/14/01 07:56 PM

Thank you. I have verified that it calculated the amount financed correctly. There is an error in something that they put in prepaids that they shouldn't have. But, I was strictly going by what was in the fed box. So, I guess Laser Pro calculated it wrong - this was the first time this happened where it didn't come out right, so I was surprised!
Posted By: Richard Insley

Re: APR - 08/15/01 12:24 AM

APR verifications ALWAYS require 3 steps:
1. Manually recheck the AF to be sure the right amount of PPFCs have been deducted.
2. Verify the payment schedule - preferably by running dollars and dates through a spreadsheet that simulates your servicing environment.
3. Enter the numbers and run the APR verification program.

Step 1 will catch errors in classifying fees as FCs--sometimes these errors are intentional. Step 2 will catch problems with PMI premiums & termination, teaser rates and other payment irregularities--sometimes these problems are due to faulty software or settings. Step 3 is least likely to find problems, but you've gotten this far so you might as well do it.