Adding Rate Adjustment and Initial Disclosure Information
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For more information about mortgage loans, see Mortgage Loans.
The New Loan - Rate Adjustment Information window will automatically appear during the new loan setup process for loan types with adjustable rates. The New Loan - Rate Adjustment Information window lets you add or maintain adjustable rate information.
How do I? and Field Help
Complete the following fields to set up the rate adjustment information for loans with rate option D or payment type 009.
| Field | Description |
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The original interest rate on the mortgage loan. The interest rate can be equal to or greater than zero but less than 36.500. Length: 6 numeric including decimal Keyword: OR |
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The maximum amount the interest rate can change in one year. The value can be defaulted from the Loan Profiles - Rate Information tab for the loan type. The beginning month for the year is defined by the Anniversary Month field. This field applies to any loan type with rate option D or payment type 009. The interest rate must be greater than 0.000 and less 36.500. The interest rate can be equal to 0.00 on the Loan Profiles - Rate Information tab. If the interest rate is 0.00 on the Loan Profiles - Rate Information tab, then a rate will be required as input on the New Loan - Rate Adjustment Information dialog box or the Adjustable Rate Information dialog box. When this field is modified on the Loan Profiles - Rate Information tab, it will be effective for new loans only. All existing loans with this type will not change. The information will need to be updated manually on the Adjustable Rate Information dialog box. When the Initialize check box is selected on the Loan Profiles - Rate Information tab for Variable Rate Index processing, the Annual Cap must be greater than 0.000. A value is required so the Portico can build the Adjustable Rate Information dialog box for any existing loans. Length: 6 numeric including decimal Keyword: AC Reporting Analytics: Annual Rate Cap (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The maximum percentage point(s) a loan's interest rate may be adjusted per rate change. The interest rate must be greater than zero but less than 36.500. This field will default from the % Limit Per Rate Change field on the Loan Profiles - Rate Information tab. 2.000 is the recommended default value. When this field is modified on the Loan Profiles - Rate Information tab, it will be effective for new loans only. All existing loans with this type will not change. The information will need to be updated manually on the Adjustable Rate Information dialog box. Length: 6 numeric including decimal Keyword: LR Reporting Analytics: Rate Chg Limit (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The highest interest rate allowed during the life of the loan. For loan types that are payment type 009 or the rate change option is D, the interest rate must be greater than zero, but less than 36.500. This field will default from the Maximum Rate field on the the Loan Profiles - Rate Information tab. 15.000 is the recommended default value. When this field is modified on the Loan Profiles - Rate Information tab for loan types that are payment type 009 or the rate change option is D, it will be effective for new loans only. All existing loans of this type will not change. The information will need to be updated manually on the Adjustable Rate Information dialog box. When this field is modified on the Loan Profiles - Rate Information tab for loan types with rate change option C, it will become the maximum interest rate limit for all existing loans of this type. When a rate change is performed in the back-office cycle, a loan's interest rate will not be changed to a value larger than the amount in the Maximum field, if the field has a value greater than zero. The maximum limit may be zero but less than 36.500. If the value is zero, a loan's interest rate may change to any value less than 36.500. Length: 6 numeric including decimal Keyword: MX Reporting Analytics: Max Int Rate (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The minimum interest rate allowed during the life of the loan. It must be less than the maximum interest rate allowed during the lifetime of the loan. For loan types that are payment type 009 or the rate change option is D, the interest rate must be greater than zero, but less than 36.500. This field will default from the Minimum Rate field on the Loan Profiles - Rate Information tab. 6.000 is the recommended default value. When this field is modified on the Loan Profiles - Rate Information tab for loan types that are payment type 009 or the rate change option is D, it will be effective for new loans only. All existing loans of this type will not change. The information will need to be updated manually on the Adjustable Rate Information dialog box. When this field is modified on the Loan Profiles - Rate Information tab for loan types with rate change option C, it will become the minimum interest rate limit for all existing loans of this type. When a rate change is performed in the back-office cycle, a loan's interest rate will not be changed to a value less than the amount in the Minimum field, if the field has a value greater than zero. The minimum limit may be zero but less than the maximum limit when the maximum limit is not zero. It also must be less than 36.500. If the value is zero, a loan's interest rate may change to any value less than 36.500. Length: 6 numeric including decimal Keyword: MN Reporting Analytics: Min Int Rate (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The month in which the loan's anniversary rate can be updated by the current rate. The month specified in this field is also the beginning month of the year for the annual cap edit. During month-end processing, Portico checks the Anniversary Month field to verify that the month shown is the next month. If the field displays the next month, Portico changes the rate in the Anniversary Rate field to the rate currently in effect for the loan, and increases the year in the Anniversary Year field by one year. This date is defined by the credit union, but must be in the future. This field applies only to loans with rate option D or loans with payment type 009. Length: 2 numeric Keyword: AM Reporting Analytics: Anniversary Date (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The year in which the loan's anniversary rate can be updated by the current rate. The month specified in the Anniversary Month field is also the beginning month of the year for the annual cap edit. During month-end processing, Portico checks the Anniversary Month field to verify that the month shown is the next month. If the field displays the next month, Portico changes the rate in the Anniversary Rate field to the rate currently in effect for the loan, and increases the year in the Anniversary Year field by one year. Length: 4 numeric Keyword: AY Reporting Analytics: Anniversary Date (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The interest rate that is in effect on the first day of the month entered in the Anniversary Month field. The interest rate can be equal to or greater than zero but less than 36.500. Length: 6 numeric including decimal Keyword: AR Reporting Analytics: Anniversary Rte (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
The information on the New Loan - Rate Adjustment Information window is transferred to the Adjustable Rate Information dialog box, where the rate adjustment information can be maintained.
The following additional fields can only be maintained if the loan type is set up for Variable Rate Index Processing.
| Field | Description |
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The credit union-defined index rate code associated with the loan or loan type. This value is defaulted from the Loan Profiles - Rate Information tab for the loan type. No value (blank) in this field indicates that the loan type is not set up for Variable Rate Index Processing (System default). This is the index rate that will be used with the margin to determine if a member's interest rate should be changed. Length: 3 alphanumeric Keyword: RC Reporting Analytics: Index Rate Code (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The margin associated with the loan and/or loan type. This margin is used with the index rate to determine if a member’s interest rate will be changed as a result of Variable Rate Index Processing. This value is defaulted from the Loan Profiles - Rate Information tab for the loan type. The valid values are: 0.000 The rate used during the rate change process will be the index rate. System default. xx.xxx The rate used during the rate change process will be the index rate plus the margin xx.xxx- The rate used during the rate change process will be the index rate minus the margin. (Minus sign appears after the value.) Length: 7 numeric including decimal Keyword: RM Reporting Analytics: Index Rate Margin (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The frequency in months associated with the loan and/or loan type. This is the frequency that will be used to determine if a member’s rate is to be evaluated and changed as a result of Variable Rate Index Processing. This value is defaulted from the Loan Profiles - Rate Information tab for the loan type. The valid values are: 000 The loan type is not set up for Variable Rate Index Processing. System default. 001 – 999 The number of months used to determine the next date a loan is eligible for a rate change due to Variable Rate Index Processing. Length: 3 numeric Keyword: RQ Reporting Analytics: Index Rate Freq (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The number of days prior to the first of the month or the date in the Next Rate Change Eligibility Date field that will be used with Variable Rate Index Processing. This value indicates the number of days prior to the first of the month that a member’s loan will be evaluated to determine eligibility for a rate change that will be effective for the 1st of the month. This value is defaulted from the Loan Profiles - Rate Information tab for the loan type. The valid values are: 000 The loan type is not set up for Variable Rate Index Processing. System default. 001 – 120 The number of days prior to the first of the month or the date in the Next Rate Change Eligibility Date field that a loan will be evaluated. These values are for loans that do provide ARM Disclosure notices when the loan supports 365-day interest. Used by Variable Rate Index Processing. 001 – 90 The number of days prior to the date in the Next Rate Change Eligibility Date field that a loan will be evaluated. These values are for loans that do provide ARM Disclosure notices when the loan supports 360-day interest. Used by Variable Rate Index Processing. 001 – 031 The number of days prior to the date in the Next Rate Change Eligibility Date field that a loan will be evaluated. These values are for loans that support both 360 and 365-day interest and do not provide ARM Disclosure notices. Used by Variable Rate Index Processing. Note: When determining the value to enter in the Days field, keep in mind when you will be changing the index rate. If the index is changed on the same day the loan is evaluated as a result of the Days field value, then you may need to perform the index change on a weekend. We recommend that you change the index rate 4-5 days before loans are to be evaluated for a rate change (based on the Days field). This will help you avoid performing index rate changes on the weekend. If a loan is evaluated before the index rate is changed, you can perform maintenance to the Next field to cause the loan to be evaluated again. If the number of days is greater than the number of days in the month, then the rate will be evaluated on the 1st of the month. For example, in April, any loans with the Days field value of 31 or 30 will be evaluated on the 1st of April. Loans with the Days field value of 29 will be evaluated on the 2nd of April. Length: 3 numeric Keyword: RY Reporting Analytics: Index Rate Days (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
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The next date the loan is eligible for variable rate index processing. This date is always the 1st of the month. Click the down arrow to select the next eligible rate change date for the loan from the pop-up calendar or enter the date in MM/DD/YYYY format. The date must be entered in the Next field by the credit union or can be defaulted by Portico if the Original Next Date field is greater than 000 on the Loan Profiles - Rate Information tab for the loan type. The date must be greater than the system date. After the loan has been evaluated for a rate change, as determined by the value in the Days field, this date will automatically update based on the Frequency field even if no rate change occurred. If a loan needs to be re-evaluated for a rate change after the date has updated, you must manually change the date back.
Keyword: RN Reporting Analytics: Next Elig Rate Chg Date (Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder) |
The Rate Change Eligibility Last field indicates the last date the loan was eligible to go through evaluation for variable rate index processing (Keyword: RL/Reporting Analytics: Last Elig Rate Chg Date - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder). To determine when the loan is eligible for a rate change and when the loan will go through evaluation, Portico will use the Frequency and Days fields in the Variable Rate Index Parameters group box. The Frequency field is specified in number of months. The Days field indicates the number of days prior to the date in the Next Rate Change Eligibility field that a member's loan will be evaluated to determine if it is eligible for a rate change effective for the first of the next month. Portico counts backwards from the next rate change eligibility date, using the value in the Days field, to calculate the next evaluation eligibility date.
In the Evaluation group box, the Next field indicates the next date the loan will go through evaluation (Reporting Analytics: Next Eval Date - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder). The date in the Next Evaluation field is determined by counting backwards from the date in the Next Rate Change Eligibility field using the number of days in the Days field. During the evaluation, Portico will determine if the loan rate and payment will change making it eligible for the Recurring ARM Disclosure notice (468 Report). The Last field indicates the date that the system last performed an evaluation on the loan to determine if a rate change should occur (Reporting Analytics: Last Eval Date - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder).
The Last Actual Rate Change field indicates the last date when an actual rate change occurred on the loan due to Variable Rate Index Processing. The system default is 000000 when the Adjustable Rate Information dialog box is initially set up. The field will be automatically updated for the first time after the effective date of the rate change on the Adjustable Rate Information dialog box has passed. The Last Actual Rate Change Date field on the Adjustable Rate Information dialog box is not updated until the rate change actually occurs. In some cases, the Last Actual Rate Change Date will be blank if the loan was not eligible for a rate change, or was eligible for a rate change, but the rate did not change due to limits, etc. (Reporting Analytics: Last Rate Chg Date - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder)
When a rate change is completed using the Loan Adjustable Rate Mortgage/Variable Rate Change window or by Variable Rate Index Processing, the Adjustable Rate Information dialog box stores the recalculated loan information or rate change until the effective date of the rate change is reached when a new payment effective date is not reported, or until the month end after the new payment effective date when a new payment effective date is reported.
For 360-day interest loans that do not produce ARM disclosure notices, the rate change effective date is the same as the due date the rate is effective. For 360-day interest loans that do produce ARM disclosure notices, the due date the rate change is effective is the month after the rate change effective date.
ARM Variable Rate Change (payment type 009 or payment type 007 with type 007 calculation option 9)
During the month-end back-office cycle prior to the rate change effective date, Portico transfers the values in the New Payment Amount, New Nbr Pmts, and New Rate fields in the Pending Rate Changes grid on the Adjustable Rate Information dialog box to their respective fields on the Loans – Payment tab, or when creating a loan payment entry. The new rate and payment amount become effective the first day of the month.
The New Payment Amount, New Nbr Pmts, and New Rate fields on the Adjustable Rate Information dialog box are changed to blank the month end after the new payment effective date has been reached.
Loan Variable Rate Change (Rate Option D)
If the payment amount or the interest rate changes, the Adjustable Rate Information dialog box stores the new payment amount, new rate, effective date, and new number of payments until month-end.
If a rate change and a loan advance occur in the same month, the system uses the new rate stored on the Adjustable Rate Information dialog box instead of the current rate during month-end recalculation.
The following occurs during month-end processing if the Effective Date field specifies the next month:
- Portico transfers the values in the New Payment Amount, New Nbr Pmts, and New Rate fields in the Pending Rate Changes grid on the Adjustable Rate Information dialog box to their respective fields on the Loans – Payment tab.
- The system blanks out the New Rate and Last Changed field on the Loan Profiles - Rate Information tab.
- Portico checks the Month field in the Anniversary group box to verify that the month shown is the next month. If the field displays the next month, Portico moves the rate in the New Rate field to the Rate field in the Anniversary group box. This ensures that the rate will not exceed the percentage in the Annual Cap field in any given year.
- The system increases the date in the Year field by one year.
- The system blanks out the New Payment Amount, New Nbr Pmts, and New Rate fields in the Pending Rate Changes grid the month end after the new payment effective date has been reached.
If N appears in the Rate Change field on the Loan Profiles – Recalculations tab or if the Payment Type field is 001, 004, or 007 (and does not produce ARM Disclosure notices) on the Loan Profiles – Account Information tab, Portico will not recalculate a loan payment amount because of a rate change, but will change the interest rate. In this scenario, Portico will insert a blank in the New Payment Amount and Number of Payments fields on the Adjustable Rate Information dialog box during recalculation. This action ensures that no adjustment will be made to the Number of Payments field when the Adjustable Rate Information dialog box information becomes effective at month-end, thus preventing Portico from replacing a valid remaining term with one that has not been adjusted for potential activity. For payment 002 or 003 the Number of Payments field will always be blank, even if the Rate Change field is not N. The term for payment type 002 and 003 loans will never be changed. Payment type 004 is being discontinued and no longer available for new loan types.
Portico also stores interest rate percentage limitations for the loan on the Adjustable Rate Information dialog box and checks these when a rate change is applied to an eligible loan.
The Disclosure Indicator field indicates if an initial disclosure was provided at loan booking or if the loan is exempt from all ARM disclosure notices (Reporting Analytics: Init Discl Ind - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder). The Disclosure Date field indicates the date the initial disclosure was provided (Reporting Analytics: Init Discl Date - Variable Rate folder in Loan Base subject in Loan folder and Variable Rate folder in ME Loan Base subject in Month-end Information\ Loan Month-end folder). The valid values for the Disclosure Indicator field are:
- N - No disclosure provided. Leave the Disclosure Date field blank.
- A - Initial Disclosure provided with actual values. The Disclosure Date field should be the loan booking date.
- E - Disclosure provided with estimated values. The Disclosure Datefield should be the loan booking date.
- I – Initial disclosure not produced. The Disclosure Date field displays the back-office cycle date the initial disclosure was bypassed due to the production of a recurring rate change disclosure. Loan is reported on the corresponding 460 or 470 Report.
- U – Initial disclosure not required/conversion. This value is input by the credit union when the loan has already had a rate change. The Disclosure Date field may be entered, but is not required.
- B – Back office generated disclosure. The Disclosure Date field displays the back-office cycle date the initial disclosure was produced. Loan is reported on the corresponding 460 or 470 Report.
- X - Loan exempt from ARM disclosures. You can enter a date in the Disclosure Datefield, but it is not required.
For any loan type that supports ARM disclosure notices, the Disclosure Indicator field will default to N - No disclosure provided and the Date field will be blank on the New Loan – Rate Adjustment Information tab. For any loan type that does not support ARM disclosure notices, the Disclosure Indicator field will default to X - Loan exempt from ARM disclosures and the Date field will be blank on the New Loan – Rate Adjustment Information tab.
In most cases, an initial disclosure will not be provided at loan booking. If the variable rate change that causes a new payment amount at an adjusted rate will occur 210 days after booking, an initial disclosure is not required at loan booking. If an initial disclosure was not provided at loan booking, select N - No disclosure provided from the Disclosure Indicator drop-down list and leave the Disclosure Date field blank. The fields in the Initial Disclosure Information group box will not appear.
If an initial disclosure was not provided at loan booking and should have been, Portico will generate the Initial ARM Disclosure notice (467 Report) in the first back-office cycle after the loan is booked. If the variable rate change will occur 210 days after booking, Portico will produce the Initial ARM Disclosure notice (467 Report) 210 days prior to the loan’s initial rate change. The Disclosure Indicator field on the Adjustable Rate Information dialog box will change from N - No disclosure provided to B - Back office generated and the Disclosure Date field will indicate when the initial disclosure was created. The Initial ARM Disclosure notice created in the back-office cycle will contain estimated values for the loan, not actual values. The loan will be reported in the Initial ARM Disclosures section on the Loan Payment Recalculation Report 460 (for payment type 007 loans with calculation option 6) or Adjustable Rate Mortgage Report 470 (for payment type 007 loans with calculation option 9).
To indicate that an initial disclosure with actual values was provided at loan booking, complete the following fields:
- Select A - Initial Disclosure provided with actual values from the Disclosure Indicator drop-down list.
- In the Disclosure Date field, enter the loan booking date.
- In the Rate Change Effective Date field, enter the pending rate change effective date provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values.
- In the New Payment Amount field, enter the recalculated payment amount that will be effective on the payment due date provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values. Maintenance to the New Payment Amount field can generate coupon sheets (610/611) for the member or coupon books (602). Coupons are not generated if the New Payment Amount field is zero. If there is a manual adjustment to the New Rate field, there should be a manual adjustment to the New Payment Amount field.
- In the New Number of Payments field, enter the number of payments remaining after recalculation provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values. This field is not required.
- In the New Rate field, enter the new rate that will be effective on the rate change effective date provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values.
- In the New Payment Effective field, enter the date that the new payment amount becomes effective, as provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values.
- In the Recalculation Balance field, enter the balance at the time the new payment was recalculated provided on the disclosure given to the member at loan booking. This field only appears if the Disclosure Indicator field is A - Initial Disclosure provided with actual values. This field is not required.
To indicate that an initial disclosure with estimated values was provided at loan booking, select E - Disclosure provided with estimated values from the Disclosure Indicator drop-down list and enter the loan booking date in the Disclosure Date field. The fields in the Initial Disclosure Information group box will not appear. You will need to manually enter the estimated values on the initial disclosure notice. The estimated values are not entered in Portico.
If the loan is exempt from the ARM disclosures, the Disclosure Indicator field will be X - Loan exempt from ARM disclosures. You can enter a date in the Disclosure Date field, but it is not required. The fields in the Initial Disclosure Information group box will not appear.
Support for providing a different disclosure indicator other than the one defaulted by Portico and the ability to provide initial disclosure fields at booking may not be available with third-party loan origination systems. If you book a loan requiring the initial ARM disclosure and have provided one at booking, you must maintain the loan using the Adjustable Rate Information dialog box.
Click Next to continue setting up the loan. Click Cancel to stop setting up the loan.
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- New Loans Report 080
- Initial ARM Disclosure Notice (467 Report)
- Recurring ARM Disclosure Notice (468 Report)
- Adjustable Rate Loan Notice (469 Report)
To reverse the transaction on the same day, perform the Reversals - Same Day Reversals tab or maintain the Adjustable Rate Information dialog box.
For a prior-day correction, perform the Reversals - Prior Day Loan Reversal tab or maintain the Adjustable Rate Information dialog box.
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