Understanding Payment Recalculation

Payment Recalculation Criteria

Portico uses the loan payment type, cyclical recalculation option, and the rate option selected for the loan type to determine whether or not loan payment recalculation can occur and when the recalculation will occur.

Loan types must be a payment type that recalculates and must have the appropriate options selected on the Loan Profiles - Recalculations tab to be eligible for loan payment recalculation. Individual loans must meet the following criteria for loan payment recalculation to occur:

Appropriate activity (loan advance or rate change) must occur with the appropriate values in the Rate Change and Loan Advance fields on the Loan Profiles – Recalculations tab.
The loan must meet eligibility requirement for loans with payment type 006 with rate option D and/or must meet the appropriate options for ARM loans.
The effective date of a rate change using Loan Adjustable Rate Mortgage/Variable Rate Change window cannot equal the effective date of a new loan. (The loan will be exempt from the rate change.)
The loan is payment type 004 (interest only) or payment type 007 (with type 007 calculation option B, F or P). Payment type 004 is being discontinued and no longer available for new loan types.
The loan meets the cyclical recalculation lead days criteria (the back-office cycle date plus lead days equals the loan’s payment due date). For loans that are delinquent or the due date is greater than next month (due to the loan’s payment frequency or the loan being paid ahead), an adjusted due date is used to determine if the loan meets the lead days criteria.

Why Payment Recalculation Occurs

Portico recalculates loan payments because:

The member makes a loan advance.
A back-office advance occurred.
An interest rate change occurred using the Loan Adjustable Rate Mortgage/Variable Rate Change window or Variable Rate Index Processing.
The monthly automatic loan payment recalculation processing occurred. (The Automatically Recalculate Monthly check box is selected on the Loan Profiles Recalculations tab.)
The loan is payment type 004 (interest only) or payment type 007 (with type 007 calculation option B, F or P). Payment type 004 is being discontinued and no longer available for new loan types.
The loan meets the cyclical recalculation lead days criteria for the loan type.

When a member makes an online loan advance at the credit union on a loan with payment type 002 or 003 and the Recalculate After Online Advance check box is selected on the Loan Profiles Recalculations tab, Portico immediately recalculates the payment amount, displays the Loans tabs with the revised payment amount, and offers you the option of accepting or rejecting the recalculated payment amount. Portico will automatically recalculate the payment again during the month end back-office cycle prior to statement generation unless the Online Payment Change check box is not selected on the Loan Profiles - Recalculations tab.

The monthly automatic loan payment recalculation processing is only valid for payment types 002, 003, 004, 006 and 007 (with type 007 calculation option B, F or P), and occurs in the month end back-office cycle prior to statement generation or in the month-end back-office cycle after statement generation depending on the payment type, rate option, and if the loan is not cyclically recalculated. If the Automatically Recalculate Monthly check box is selected on the Loan Profiles - Recalculations tab, Portico will recalculate the loan payment even if an advance or rate change did not occur. For loans that are cyclically recalculated, the monthly automatic loan payment recalculation process will occur in the back-office cycle when the loan meets the lead days criteria defined on the Loans - General tab. Payment type 004 is being discontinued and no longer available for new loan types.

When Payment Recalculation Occurs

Automatic payment recalculation can occur at one of the following times:

At the time of an online loan advance (payment types 002 and 003).
In the next back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window on loans with payment type 002, 003 or 006 and rate option D, and do not recalculate cyclically. The pending payment amount is not applied until the month end back-office cycle.
In the same back-office cycle that the loan was evaluated due to Variable Rate Index Processing for non-cyclical recalculating loan types. The stored payment amount is not applied until the month end back-office cycle.
In the month end back-office cycle prior to statement generation when an interest rate change or a loan advance occurs during the month, or when monthly automatic loan payment recalculation is applied to non-cyclical recalculating loans with payment type 002, 003, 004, 006 or 007 (with type 007 calculation option B, F or P) when the rate option is not D. Payment type 004 is being discontinued and no longer available for new loan types.
In the month-end back-office cycle after statement generation when a loan advance occurs during the month or when monthly automatic loan payment recalculation is applied to non-cyclical recalculating loans with payment type 002, 003, 004, 007, or 007 (with type 007 calculation option B, F or P) and rate option D. Payment type 004 is being discontinued and no longer available for new loan types.
In the back-office cycle when the loan meets the cyclical recalculation lead days criteria for the loan and the loan frequency is monthly or greater.
In the month-end back-office cycle for cyclical recalculating loans if the payment frequency is less than monthly and the loan type produces loan billing statements.
In the back-office cycle when the loan meets the lead days criteria for the loan for the final time during the month, the loan frequency is less than monthly, and the loan type produces mortgage loan statements.

If a rate change occurred after a loan advance for an individual loan with payment type 002, 003 or 006 and rate option D, Portico will not recalculate that loans payment amount at month end since the new balance was included in the recalculation due to the rate change.

Portico includes CUNA Mutual credit life and credit disability insurance premiums in the payment recalculation process. Also included are any interest charges calculated but not collected as specified in the Finance Charges Calculated But Not Collected (FCCBNC) field on the Loans - Interest/Charges tab.

Recalculation Chart

Options on the Loan Profiles - Rate Information tab and Loan Profiles - Recalculations tab determine whether Portico will recalculate payment amounts and/or term based on rate change and/or loan advance activity.

Payment Type 001 and Payment Type 007 with type 007 calculation option 1 (Rate Option is D)
The loan will appear on the 460 Report and 469 Notices produce the cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window, or the same cycle the loan is evaluated due to Variable Rate Index Processing. The new rate is stored on the Adjustable Rate Information dialog box to be applied on the 1st of the following month. The payment amount is never recalculated. If the Loan Advance field is R on the Loan Profiles - Recalculations tab, loans with advances during the month will appear on the month end report. The loan type may produce loan billing statements at month end or during the month as determined by the number of lead days. Loan types with payment type 007 and calculation option 1 may produce mortgage loan statements during the month as determined by the number of lead days.

Payment Type 002, Payment Type 003, and Payment Type 007 with calculation options 2 and 3 (Rate Option is not D and Cyclical Recalculation is not selected)

Reason for Recalculation	Loan advance and Loan Advance field is P	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window and Rate Change field is P	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	Month end before statements produce	Month end before statements produce. Rate change is applied on effective date specified on the Loan Adjustable Rate Mortgage/Variable Rate Change window.	Month end before statements produce.
Reporting	460, 461, 462	460, 461, 462	460, 461, 462
Exceptions	Online advance and new payment accepted online, but Online Payment Change check box is not selected for loan types with payment types 002 and 003.	None	None

Payment Type 002, Payment Type 003, and Payment Type 007 with calculation options 2 and 3 (Rate Option is not D and Cyclical Recalculation is selected)

Reason for Recalculation	Loan advance and Loan Advance field is P	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window and Rate Change field is P	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month. The rate change is applied on effective date specified on the Loan Adjustable Rate Mortgage/Variable Rate Change window.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.
Reporting	460, 461, 462, 472	460, 461, 462, 472	460, 461, 462, 472
Exceptions	Online advance and new payment accepted online, but Online Payment Change check box is not selected for loan types with payment types 002 and 003.	None	None

Payment Type 002, Payment Type 003, and Payment Type 007 with calculation options 2 and 3 (Rate Option is D)

Reason for Recalculation	Loan advance and Loan Advance field is P	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	Month end after statements produce.	Back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/ Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate and payment (if applicable) are stored on the Adjustable Rate Information dialog box to be applied on the 1st of the following month.	Month end after statements produce
Reporting	460, 461, 462	460, 462, 469	460, 461, 462
Exceptions	Online advance and new payment accepted online, but Online Payment Change check box is not selected for loan types with payment types 002 and 003.	None	None

Payment Type 002, Payment Type 003, and Payment Type 007 with calculation options 2 and 3 (Rate Option is D and Cyclical Recalculation is selected)

Reason for Recalculation	Loan advance and Loan Advance field is P	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month. The new rate is stored on the Adjustable Rate Information dialog box in the back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate will be applied on the 1st of the following month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.
Reporting	460, 461, 462, 472	460, 462, 469, 472	460, 461, 462, 472
Exceptions	Online advance and new payment accepted online, but Online Payment Change check box is not selected for loan types with payment types 002 and 003.	If the pending rate change is effective before the loan’s next due date, then the loan will recalculate due to the rate change. For loan frequencies monthly or greater, if the pending rate change is effective after the loan’s next due date, then the loan will recalculate during the next month’s payment recalculation due to the rate change. For loan frequencies less than monthly where the payment entries for the month have already been created, the loan will recalculate due to the rate change the next time payment entries are created.	None

Payment Type 004 and Payment Type 007 with calculation options, B, F or P (Any Rate Option and Cyclical Recalculation is not selected). Payment type 004 is being discontinued and no longer available for new loan types.

Reason for Recalculation	Interest only and Interest Plus loan types (Automatically Recalculate Monthly check box is selected)
When Recalculation Happens	Month end before statements produce for rate options other than D.	Month end after statements produce for rate option D.
Reporting	460, 461, 462 when rate option is not D	460, 461, 462, 469 when rate option is D 467 and 468 when rate option is D and the loan type supports Variable Rate Index Processing (payment type 007 only)
Special Processing when Rate Option is D	New rate only is stored on the Adjustable Rate Information dialog box in the back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate will be applied on the 1st of the following month. When the Initial and Recurring ARM Disclosures (467 and 468 Reports) are produced, the new rate, new payment amount, new number of payments, new payment effective date and recalculation balance will be stored on the Adjustable Rate Information dialog box in the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new values will be applied on the 1st of the following month.
Exceptions	None

Payment Type 004 and Payment Type 007 with calculation options, B, F or P (Any Rate Option and Cyclical Recalculation is selected). Payment type 004 is being discontinued and no longer available for new loan types.

Reason for Recalculation	Interest only and Interest Plus loan types (Automatically Recalculate Monthly check box is selected)
When Recalculation Happens	Back-office cycle when the loan meets the lead days criteria for the loan type and the loan frequency is monthly or greater. At month end when the loan frequency is less than monthly when the payment type is 004.
Reporting	460, 461, 462 when rate option is not D 472 (payment type 007 only)	460, 461, 462, 469 when rate option is D 467, 468, 472 when rate option is D and the loan type supports Variable Rate Index Processing (payment type 007 only)
Special Processing when Rate Option is D	New rate only is stored on the Adjustable Rate Information dialog box in the back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate will be applied on the 1st of the following month. When the Initial and Recurring ARM Disclosures (467 and 468 Reports) are produced, the new rate, new payment amount, new number of payments, new payment effective date and recalculation balance will be stored on the Adjustable Rate Information dialog box in the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new values will be applied on the 1st of the following month.
Exceptions	None

Payment Type 006 and Payment Type 007 with calculation option 6 (Rate Option is D and Cyclical Recalculation is not selected)

Reason for Recalculation	Loan advance and Loan Advance field is P, T or M.	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P or T.	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	Month end after statements produce.	Back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/ Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate, payment and term stored on the Adjustable Rate Information dialog box to be applied on the 1st of the following month.	Month end after statements produce.
Reporting	460, 461, 462	460, 462, 469 467, 468 when rate option is D and the loan type supports Variable Rate Index Processing (payment type 007 only)	460, 461, 462
Exceptions	Rate change for loan type using Loan Adjustable Rate Mortgage/Variable Rate Change window or loan evaluated due to Variable Rate Index Processing after advance occurs. In this case, see rate change information.	If the Rate Change field is P and the Initial and Recurring ARM Disclosures (467 and 468 Reports) are produced, the new rate, new payment amount, new number of payments, new payment effective date and recalculation balance will be stored on the Adjustable Rate Information dialog box in the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new values will be applied on the 1st of the following month.	None

Payment Type 006 and Payment Type 007 with calculation option 6 (Rate Option is D and Cyclical Recalculation is selected)

Reason for Recalculation	Loan advance and Loan Advance field is P, T or M.	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P or T.	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month. The new rate is stored on the Adjustable Rate Information dialog box in the back-office cycle immediately following a rate change using the Loan Adjustable Rate Mortgage/Variable Rate Change window or the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new rate will be applied on the 1st of the following month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.
Reporting	460, 461, 462, 472	460, 462, 469 467, 468, 472 when rate option is D and the loan type supports Variable Rate Index Processing (payment type 007 only)	460, 461, 462, 472
Exceptions	Rate change for loan type using Loan Adjustable Rate Mortgage/Variable Rate Change window or loan evaluated due to Variable Rate Index Processing after advance occurs. In this case, see rate change information.	If the pending rate change is effective before the loan’s next due date, then the new rate is considered in the new payment recalculation. For loan frequencies monthly or greater, if the pending rate change is effective after the loan’s next due date, then the new rate is not considered until next month during payment recalculation. For loan frequencies less than monthly where the payment entries for the month have already been created, the loan will recalculate due to the rate change the next time payment entries are created. If the Rate Change field is P and the Initial and Recurring ARM Disclosures (467 and 468 Reports) are produced, the new rate, new payment amount, new number of payments, new payment effective date and recalculation balance will be stored on the Adjustable Rate Information dialog box in the same back-office cycle the loan is evaluated due to Variable Rate Index Processing. The new values will be applied on the 1st of the following month.	None

Payment Type 006 and Payment Type 007 with calculation option 6 (Rate Option is not D and Cyclical Recalculation is not selected)

Reason for Recalculation	Loan advance and Loan Advance field is P, T or M.	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P or T.	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	Month end before statements produce.	Month end before statements produce. Rate change is applied on the effective date specified on the Loan Adjustable Rate Mortgage/ Variable Rate Change window.	Month end before statements produce.
Reporting	460, 461, 462	460, 461, 462	460, 461, 462
Exceptions	None	None	None

Payment Type 006 and Payment Type 007 with calculation option 6 (Rate Option is not D and Cyclical Recalculation is selected)

Reason for Recalculation	Loan advance and Loan Advance field is P, T or M.	Rate change using Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluated due to Variable Rate Index Processing and Rate Change field is P or T.	Automatically Recalculate Monthly check box is selected
When Recalculation Happens	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month. The rate change is applied on the effective date specified on the Loan Adjustable Rate Mortgage/ Variable Rate Change window.	If the loan frequency is monthly or greater, recalculation occurs in the back-office cycle when the loan meets the lead days criteria for the loan type. If the loan frequency is less than monthly, recalculation occurs at month end when the loan type produces loan billing statements. If the loan type produces loan mortgage statements, recalculation occurs when the lead days criteria is met for the final time during the month.
Reporting	460, 461, 462, 472	460, 461, 462, 472	460, 461, 462, 472
Exceptions	None	None	None

Additional Notes

Payment type 006 loans may recalculate either the payment amount or the term of the loan depending on the options selected on the Loan Profiles window.

For loan types with rate option D, cyclical recalculation is not selected and the Rate Change field is N, if the loans appear in the Variable Rate Loans section of the report and the loan rate is changing, the new payment amount and new number of payments be blank. These loans will be reported with exception code 57 indicating that the payment is not recalculating due to a rate change

For loan types with rate option D, cyclical recalculation is selected, and the loans are not set up to produce Initial and Recurring ARM Disclosure (467 and 468 Reports), the new payment amount and new number of payments will be blank. Since the loan payment amount is recalculated when the loan meets the lead days criteria, these loans will be reported with exception code 57 indicating that the payment is not recalculating due to a rate change. The new rate is stored on the Adjustable Rate Information dialog box.

For loan types with cyclical recalculation selected and support escrow, the new escrow amount recalculated for a loan will not be reflected on the report unless the loan is recalculating at month end. If the loan recalculates at month end, the new escrow value will be reflected in the new payment amount and exception code 21 will appear.

The 462 Report which produces loan billing statements can be scheduled for all payment types. Loan billing statements will produce for loan types with the appropriate option in the Statement Print field on the Loan Profiles – Account Information tab. Refer to the 462 Report documentation for more information.

The 472 Report which produces loan mortgage statements can be scheduled for all payment type 007 loans. Loan mortgage statements will produce for loan types with the appropriate option in the Statement Print field on the Loan Profiles – Account Information tab. Refer to the 472 Report documentation for more information.

For payment type 007 loans, the due date on the 460 Report is the date associated with the payment amount from the payment entry created on the Payment Entry Details dialog box. If the loan is delinquent, the due date on the 460 Report will not be the due date on the Loans tab and an asterisk (*) will appear before the due date on the report. The payment amount for the payment entry created will appear in the PAYMENT AMOUNT NEW column on the 460 Report. The payment amount from the Loans tab will appear in the PAYMENT AMOUNT OLD column. When multiple payment entries are created for a loan, only the newest payment entry will be reported.

When the loan is delinquent and all old payment entries, or some payment entries must be created for the payment type 007 loan, but the next payment due date will not be within the next month (due to skip processing or frequency) no entries will be built. The loan will be reported with exception code 23 (due to frequency) or 24 (due to skip processing). No entries will be created in the back-office cycle, if all payment entries cannot be built. The loan will be reported with the appropriate exception code as to why the entries were not built.

Recalculation Scenarios

Rate Change: System Simulation

When you perform an automated rate change (Loan Adjustable Rate Mortgage/ Variable Rate Change window) on a loan with payment type 006, or payment type 007 (with type 007 calculation options 6 or 9) and rate option D or on a loan with payment type 009, Portico simulates loan payment and insurance premium advance activity that is scheduled to occur between the post date of the Loan Adjustable Rate Mortgage/ Variable Rate Change window and the rate change effective date. Portico performs this simulation activity in an effort to produce a more accurate payment amount. When a loans rate is changed due to Variable Rate Index Processing, Portico completes the same simulation activity; however, the new rate is determined by the index and margin.

Loans with payment type 006 or payment type 007 (with type 007 calculation option 6) and rate option D could have payment and insurance premium activity simulated during automatic loan payment recalculation. For example, a loan with a due date of 05/25/16 and with insurance premiums scheduled to post at month-end would have both of these activities simulated during recalculation due to a rate change performed on 05/05/16, effective for 06/01/16. In the same scenario, a loan with a due date of 05/03/16 would have only the insurance premium simulated, since the scheduled payment date does not fall between the post and effective dates of the rate change.

Portico simulates loan payments by calculating the portion of the payment that will go to principal (payment amount, not including escrow, minus accrued interest), subtracting that amount from the loan balance, and updating the interest-paid-date to the payment effective date.

Portico simulates insurance premium advances by calculating the premium, adding that amount to the loan balance, updating the Interest-Paid Date to the premium advance date, and storing the accrued interest in the Finance Charges Calculated But Not Collected (FCCBNC) field on the Loans - Interest/Charges tab.

A loan payment due on the first of the month will not be included in the payment simulation for a rate change effective on the first of the same month.

A delinquent loan may have multiple payments simulated, since payments will be simulated until the payment due date equals or exceeds the rate change effective date.

Example 1: This example details a payment and insurance premium simulation due to an automated rate change performed by the Loan Adjustable Rate Mortgage/ Variable Rate Change window or Variable Rate Index Processing on a non-cyclical recalculating loan with payment type 006 or payment type 007 (with type 007 calculation option 6) and rate option D. The Loan Adjustable Rate Mortgage/ Variable Rate Change window or loan evaluation is performed on 06/05/16 with an effective date of 07/01/16. The Rate Change field on the Loan Profiles Recalculations tab is P, so Portico will adjust the payment amount, instead of the term, during recalculation due to the rate change.

Following are the existing terms of a loan as of 06/05/16. This loan subscribes to member pay, single credit life insurance, at the rate of $.90 per $1000.

Loan Balance: 14650.24
Payment Amount: 296.97
Payment Due Date: 06/20/16
Interest-Paid Date: 05/20/16
Payments Left: 63
Interest Rate: 08.500
FCCBNC: 0.00

The rate change performed on 06/05/16 causes Portico to first simulate the payment due on 06/20/16. This process reduces the loan balance by the portion of the payment amount that would be applied to principal, reduces the number of payments left by one, and updates the payment-due and interest-paid dates.

Loan Balance: 14459.03
Payment Amount: 296.97
Payment Due Date: 07/20/16
Interest-Paid Date: 06/20/16
Payments Left: 62
Interest Rate: 08.500
FCCBNC: 0.00

The rate change also causes Portico to simulate the insurance premium to be posted on 06/30/16. This process increases the loan balance by the amount of the insurance premium, updates the interest-paid date to the effective date of the insurance posting, and stores the amount of accrued interest, up to the new interest-paid date, in the Finance Charges Calculated But Not Collected (FCCBNC) field.

Loan Balance: 14472.04
Payment Amount: 296.97
Payment Due Date: 07/20/16
Interest-Paid Date: 06/30/16
Payments Left: 62
Interest Rate: 08.500
FCCBNC: 33.67

Portico then applies the rate change, and determines the figures to use in the new payment amount calculation. This process changes the interest rate, updates the interest-paid date to the effective date of the rate change, and adds the accrued interest calculated at the old rate to the Finance Charges Calculated But Not Collected (FCCBNC) field.

Loan Balance: 14472.04
Payment Amount: 296.97
Payment Due Date: 07/20/16
Interest-Paid Date: 07/01/16
Payments Left: 62
Interest Rate: 09.500
FCCBNC: 37.04

Entering the above figures into the truth-in-lending calculation will yield a new payment amount of $303.78, which may be reported to the member on the adjustable rate loan notice (469 Report), and will be stored on the Adjustable Rate Information dialog box until the effective date of the rate change.

Example 2: This example of an automated rate change performed by the Loan Adjustable Rate Mortgage/ Variable Rate Change window or Variable Rate Index Processing on a non-cyclical recalculating loan with payment type 006 or payment type 007 (with type 007 calculation option 6) and rate option D demonstrates the payment and insurance premium simulations for a delinquent loan. The rate change transaction or loan evaluation is performed on 06/05/16 with an effective date of 07/01/16. The Rate Change field on the Loan Profiles Recalculations tab is P, so Portico will adjust the payment amount, instead of the term, during recalculation due to a rate change.

Following are the existing terms of a loan as of 06/05/16. This loan subscribes to member pay, single credit life insurance, at the rate of $.90 per $1000:

Loan Balance: 7540.79
Payment Amount: 250.41
Payment Due Date: 04/01/16
Interest-Paid Date: 05/31/16
Payments Left: 35
Interest Rate: 09.250
FCCBNC: 175.81

The rate change performed on 06/05/16 causes Portico to simulate the payments due on 04/01/16, 05/01/16, and 06/01/16. The 07/01/16 payment is not simulated, since that is also the rate change effective date. This process applies the payments to the Finance Charges Calculated But Not Collected (FCCBNC) field until it is reduced to 0.00, reduces the loan balance by the portion of the payment amounts that would be applied to principal, reduces the number of payments left by one for each payment, and updates the payment-due and interest-paid dates.

04/01/16

Payment Loan Balance: 7466.19
Payment Amount: 250.41
Payment Due Date: 05/01/16
Interest-Paid Date: 05/31/16
Payments Left: 34
Interest Rate: 09.250
FCCBNC: 0.00

05/01/16

Payment Loan Balance: 7215.78
Payment Amount: 250.41
Payment Due Date: 06/01/16
Interest-Paid Date: 05/31/16
Payments Left: 33
Interest Rate: 09.250
FCCBNC: 0.00

06/01/16

Payment Loan Balance: 6967.20
Payment Amount: 250.41
Payment Due Date: 07/01/16
Interest-Paid Date: 06/01/16
Payments Left: 32
Interest Rate: 09.250
FCCBNC: 0.00

The rate change also causes Portico to simulate the insurance premium to be posted on 06/30/16. This process increases the loan balance by the amount of the insurance premium, updates the interest-paid date to the effective date of the insurance posting, and stores the amount of interest accrued up to the new interest-paid date in the Finance Charges Calculated But Not Collected (FCCBNC) field.

Loan Balance: 6973.47
Payment Amount: 250.41
Payment Due Date: 07/01/16
Interest-Paid Date: 06/30/16
Payments Left: 32
Interest Rate: 09.250
FCCBNC: 51.20

Portico then applies the rate change and determines the figures to use in the new payment amount calculation. This process changes the interest rate, updates the interest-paid date to the effective date of the rate change, and adds the accrued interest calculated at the old rate to the Finance Charges Calculated But Not Collected (FCCBNC) field.

Loan Balance: 6973.47
Payment Amount: 250.41
Payment Due Date: 07/01/12
Interest-Paid Date: 07/01/12
Payments Left: 32
Interest Rate: 09.750
FCCBNC: 52.97

Entering the above figures into the truth-in-lending calculation will yield a new payment amount of $251.63, which may be reported to the member on the adjustable rate loan notice (469 Report), and will be stored on the Adjustable Rate Information dialog box until the effective date of the rate change.

Example 3: Portico simulates payment activity for payment type 009 or payment type 007 (with type 007 calculation option 9) loans by calculating the number of payments remaining on the loan, regardless of delinquency, and recalculating the payment amount accordingly. To determine the number of payments remaining on the loan, Portico subtracts the effective date of the rate change from the original loan date to arrive at the number of months difference. The number of months difference is then subtracted from the original number of payments.

Rate Change Effective Date (08/01/16) - Loan Origin Date (12/01/06) = Months Difference (116)

Original Number of Payments (180) - Months Difference (116) = Number of Payments Remaining (64)

The number of loan payments simulated is based on the scheduled number of payments between the post date of the Loan Adjustable Rate Mortgage/ Variable Rate Change window and the rate change effective date, or the Variable Rate Index Processing evaluation date and the rate change effective date. Payments are simulated by reducing the loan balance by the portion of each payment that will be applied to principal. Portico uses this new balance and the new rate to recalculate the payment amount based on a term of 64.

Rate Change and Loan Advance

Depending on the loan payment type and rate option, the sequence and the combination of recalculation activity (loan advances and rate changes) occurring during the month can have an effect on the outcome of the loan payment recalculation:

Example 1: Payment type 002, 003, 006 or 007 with calculation option 6 with rate option D (ARM Disclosures not selected)
Example 2: Payment type 002, 003, 006 or 007 with calculation option 6 with other rate options

Example 1: If, in the same month, a loan advance occurs on a non-cyclical recalculating loan with payment type 002, 003, 006, or 007 with calculation option 6 and rate option D prior to the posting of an automated rate change (Loan Adjustable Rate Mortgage/ Variable Rate Change window) or evaluation due to Variable Rate Index Processing, Portico will not recalculate the loan payment amount again at month-end. Normally, recalculation would occur at month-end because of the loan advance, but since the new balance was included in the recalculation caused by the rate change, Portico will not recalculate the payment amount again.

Also, in this case, the option specified in the Rate Change field on the Loan Profiles Recalculations tab, not the option in the Loan Advance field, will apply to the recalculation. For example for payment type 006, if the loan type specifies that the term should be adjusted in the event of a loan advance (Loan Advance field is T) and that the payment amount should be recalculated in the event of a rate change (Rate Change field is P), Portico will adjust the payment amount since recalculation is occurring due to the rate change.

If, in the same month, a loan advance occurs after an automated rate change, recalculation will be applied again at month-end, but the result may be different since Portico will use the information on the Adjustable Rate Information dialog box for the month-end recalculation. For example, if the term was adjusted during recalculation due to the rate change, and the Loan Advance field specifies that the payment amount should be recalculated due to the loan advance, Portico will change both the term and the payment amount because the term on the Adjustable Rate Information dialog box will be used to recalculate the payment amount.

Example 2: If a non-cyclical recalculating loan with payment type 002, 003, 006 or 007 with calculation option 6 and a rate option other than D incurs multiple types of activity, the adjustment specified in the Loan Advance field will override the adjustment specified in the Rate Change field. For example for payment type 006, if the Loan Advance field specifies that the payment amount should be recalculated (P) and the Rate Change field specifies that the term should be adjusted (T), Portico will recalculate the payment amount. However for all three types, if N appears in the Loan Advance field and the Rate Change field specifies an option other than N, Portico will process the recalculation based on the option specified in the Rate Change field.

Term Extensions

If the Automatically Recalculate Monthly check box is selected on the Loan Profiles - Recalculations tab, Portico attempts to extend the term of the loan and leave the payment amount the same during automatic recalculation. Portico will calculate the difference between the number of payments remaining (Remaining Number of Payments field for the loan on Loans - Payment tab) and the new number of payments. The number of payments extended will be added to the original number of payments for the loan on the Loans - General tab. For example if the original number of payments is 180, and the remaining number of payments is 160 at the time of recalculation, Portico will extend the number of payments remaining to the maximum allowed, which in this example is 180. The distance between the remaining number of payments at 160 to the new number of payments 180, is an increase in 20 payments. This same increase in 20 payments will be added to the original number of payments of 180 to determine a new original number of payments of 200.

If the term cannot be adjusted without exceeding the maximum term for the life of the loan for the loan type (Type 006 Max Term (months) field on the Loan Profiles - Recalculations tab), Portico will recalculate the payment amount on the current remaining term. If a loan advance or a rate change occurs during the month, a value other than T in the Loan Advance or Rate Change field will cause Portico to override the standard recalculation.

If the Rate Change or Loan Advance field on the Loan Profiles - Recalculations tab specifies T, Portico will try to extend the term of the loan during recalculation due to the appropriate activity. However, the term of the loan must not exceed the original number of payments for the loan on the Loans - General tab. To ensure that this does not happen, Portico calculates the number of months required to pay off the loan at the current payment amount, and compares that to the number of months that the term of the loan can be extended, based on the original number of payments for the loan and the Type 006 Max Term (months) field. If the term of the loan can be extended without exceeding the maximum allowed, Portico will extend the term. If extending the term will cause the loan to exceed the maximum term allowed for the life of the loan, Portico will recalculate the payment amount based on the existing remaining term.

For example, a loan with payment type 006 incurred a loan advance during the month. The Loan Advance field on the Loan Profiles - Recalculations tab specifies T, so Portico will attempt to extend the term of the loan during automatic loan payment recalculation.

Maximum Term Allowed for the loan type on the Loan Profiles - Recalculations tab = 120
Original Number of Payments for the loan on Loans - General tab = 96
- 120 - 96 = 24 Available Payments
# of Payments Required to Pay Off the Loan at the Current Payment Amount = 102
Remaining Number of Payments for the loan on Loans - Payment tab = 88
- 102 - 88 = 14 Total Number of Payments Needed
In this scenario, the number of payments needed (14) is less than the available number of payments for the loan (24), so Portico will increase the Original Number of Payments field for the loan on Loans - General tab and Remaining Number of Payments field for the loan on Loans - Payment tab by 14.

If the values were different...

Maximum Term Allowed for the loan type on the Loan Profiles - Recalculations tab = 120
Original Number of Payments for the loan on Loans - General tab = 120
- 120 - 120 = 0 Available Payments
# of Payments Required to Pay Off the Loan at the Current Payment Amount = 102
Remaining Number of Payments for the loan on Loans - Payment tab = 88
- 102 - 88 = 14 Total Number of Payments Needed
In this scenario, the number of payments needed (14) is greater than the available number of payments for the loan (0), so the Original Number of Payments field for the loan on Loans - General tab and the Remaining Number of Payments field for the loan on Loans - Payment will not change. The loan term will not be extended and the payment will be recalculated using the remaining number of payments on the loan (88)

Partial Accumulator Maintenance

When recalculation occurs in the month end back-office cycle prior to statement generation for non-cyclical recalculating loans with payment types 002, 003, or 006 (with a rate option other than D), or in the month-end cycle after statement generation for non-cyclical recalculating loans with payment type 002, 003, or 006 and rate option D, Portico enters the difference between the old and new payment amounts in the Partial Payment Accumulator field on the Loans - General tab, if the Use Partial Accumulator field when a Rate Change Only Occurs check box is selected on the Loan Profiles - Recalculations tab. This allows the member to make the old payment amount once more without going delinquent, until notification of the new payment amount is received. The Use Partial Accumulator field when a Rate Change Only Occurs check box does not apply to loans with payment type 002, 003 or 006 and rate option D or payment types 007 and 009 that are recalculating due to an automated rate change (Loan Adjustable Rate Mortgage/ Variable Rate Change window or Variable Rate Index Processing), since the member is notified ahead of time of the pending changes. The Partial Accumulator field determines if the Partial Payment Accumulator field on the Loans - General tab should be adjusted when a payment is recalculating due to an automated rate change (Loan Adjustable Rate Mortgage/ Variable Rate Change window or Variable Rate Index Processing) only. The same process occurs for loan types with the Cyclical Recalculation check box selected; however, the maintenance will occur in the back-office cycle when the loan recalculates.

Partial Accumulator processing options are available for all cash-paid, payroll-paid, and automatic transfer-paid loans.

Cyclical Recalculation is selected and Rate Option is D

Pending rate changes for loans with rate option D and cyclical recalculation will occur at month end. However, at the time the rate change is entered on the Loan Adjustable Rate Mortgage/Variable Rate Change window or an index rate loan is evaluated, no payment and/or term recalculation will occur, regardless of the value in the Rate Change field on the Loan Profiles - Recalculation tab, unless the loan type generates ARM Disclosure notices (467 and 468 Reports). Loan types setup to produce ARM Disclosure notices must report the new payment amount associated with a rate change, regardless if the loan recalculates cyclically. The new rate will be calculated and stored on the Adjustable Rate Information dialog box, but the New Payment Amount field will be 0.00 and the New Number of Payments field will be blank. This indicates that the payment amount and term will not be applied when the new rate is applied. At the time the loan is eligible for cyclical recalculation, the pending rate change will be taken into consideration. If the pending new rate will be effective before the next payment due date, the cyclical recalculation process will include the new rate in calculating the new payment amount and/or term. If the pending new rate will be effective after the next payment due date, cyclical recalculation process will not include the new rate in calculating the new payment amount or term. The rate change will be considered in the next run of cyclical recalculation process for the loan (next month).

Rate change pending when billing statement produced, effective before next payment due date: If a rate change is pending on a loan when the billing statement is produced, the pending rate change and the effective date of the rate change will be reported on the billing statement. The new interest rate will be used during payment recalculation since the effective date of the rate change is before the next due date. If the loan payment recalculates due to other criteria (loan advances) when the statement produces, the new payment amount will be calculated using the value in the Loan Advance field on the Loan Profiles - Recalculation tab (460 Report reason code B). If the loan does not meet other criteria (loan advances or auto recalculation) to recalculate the new payment amount when the statement produces, the value in the Rate Change field on the Loan Profiles - Recalculation tab will be used to recalculate the payment (460 Report reason code R). The rate change will be reflected as a line entry on the next month’s statement, since the rate change has been applied. Next month, if the loan does meet other recalculation criteria (loan advances), the loan will recalculate according to the loan advance or auto recalculation criteria (460 Report reason code A or blank).

Rate change pending when loan mortgage statement is produced, effective before next payment due date, for loans receiving 1 monthly statement: The new interest rate will be used during payment recalculation since the effective date of the rate change is before the next due date. If the loan payment recalculates due to other criteria (loan advances) when the statement is produced, the new payment amount will be calculated using the value in the Loan Advance field on the Loan Profiles - Recalculation tab (460 Report reason code B). If the loan does not meet other criteria (loan advances or auto recalculation) to recalculate the new payment amount when the statement produces, the value in the Rate Change field on the Loan Profiles - Recalculation tab will be used to recalculate the payment (460 Report reason code R). The rate change will be reflected as a line entry on the next month’s statement, since the rate change has been applied.

Rate change pending when loan billing statement or loan mortgage statement produced, effective after next payment due date, for loans receiving 1 monthly statement: If a rate change is pending on a loan when the statement is produced, the effective date of the rate change will be reported on the statement. The new interest rate will not be used during payment recalculation since the effective date of the rate change is not before the next due date. If the loan payment recalculates due to other criteria (loan advances or auto recalculation) when the statement produces, the new payment amount will be calculated according to the loan advance or auto recalculation criteria (460 Report reason code A or blank). If the loan does not meet any other criteria (loan advances or auto recalculation) to recalculate a new payment amount when the statement produces, then the payment amount will not be changed. The loan will not appear on the 460 report. The rate change will be reflected as a line entry on the next month’s statement, since the rate change has been applied. Next month, if the loan does not meet any other recalculation criteria, the value in the Rate Change field on the Loan Profiles - Recalculation tab will be used to recalculate the payment (460 Report reason code R). Next month, if the loan does meet other recalculation criteria (loan advances), the value in the Loan Advance field on the Loan Profiles - Recalculation tab will be used to recalculate the payment amount (460 Report reason code B).

Rate change performed after loan billing statement produced or loan mortgage statement produced for loans receiving 1 monthly statement, effective before next payment due date: If a rate change is performed on a loan after the statement is produced, but the rate change is applied to the loan before the next statement payment due date, the rate change will not appear as pending on any statement. The rate change will only appear on the statement as a detail line giving the new rate for the loan. If the loan does not meet any other recalculation criteria before the next statement is produced, the value in the Rate Change field on the Loan Profiles - Recalculation tab will be used to recalculate the payment (460 Report reason code R). If the loan does meet other recalculation criteria (loan advances) before the next statement is produced, the value in the Loan Advance field on the Loan Profiles - Recalculation tab will be used to recalculate the payment (460 Report reason code B).