Hi there. We do bi-weekly loans at our institution. When we disclose the loan to the borrower, we disclose it as the "actual" number of payments. So as an example, if it is a 30 yr bi-weekly loan, we disclose it as (for example) 24 yrs 6 months. For the purposes of underwriting, our underwriters underwrite the loan to a term of 30 years. We have always disclosed the loan term as the actual number of payments. I never thought to ask, and I can't find any guidance in the FFIEC guide, but is that correct? Also, what happens if a loan for a bi-weekly product is withdrawn or denied before it is disclosed?

If your legal agreement (note) has a maturity date in 24y 6m, it is not a 30-year loan no matter what you might call it internally. If you are communicating to the borrower that it is a 30-year loan, I would say that borderlines on a UDAAP. Not sure if you plan on meeting ATR requirements? How you can underwrite a 24y 6m month loan like it is a 30-year loan, as that is going to understate your DTI?

We underwrite it to a 30 year term to get a qualifying payment. When the loan is conditionally approved, it's amortized to get the *actual* number of payments. The note is expressed as the actual number of payments. The LE and CD disclose it as the actual number. But what about loans that are never disclosed, where the borrower withdraws before disclosures are sent?

Your payments and ratios are going to be off. If your monthly payment for a 30 year loan comes out to $1,000, the borrower will be actually paying $1,083.33 monthly.

If you're underwriting a 30 year loan with bi-weekly payments then that's 780 payments (26 x 30). There is no way you get a maturity date that is five and a half years earlier than it should be if you do it correctly. My best guess would be that you are underwriting 24 payments in a year, which would not be bi-weekly but rather semi-monthly and that would be five years less if collecting them on a bi-weekly schedule.

Yes, I am still pretty much at a loss also as to what is actually happening for underwriting purposes and the impact on HMDA reporting, let alone meeting ATR requirements.

"Your payments and ratios are going to be off. If your monthly payment for a 30 year loan comes out to $1,000, the borrower will be actually paying $1,083.33 monthly."

One additional comment - that difference of 8.3% in the payment amount, could equate to a increase of 3.6% in the debt ratio!