Answer:
Answer by Randy Carey: I believe the correct input in APRWin would be...
That is not correct. The correct input values would be the actual individual payment amounts for all of the first 111 payments.
Answer:
Answer by Richard Insley: Assuming the GMI premiums step down once per year and that the first such reduction occurs on the 13th payment, you should organize and enter your payment data as follows:
12 @ $1,782.57
12 @ (first downward step)
12 @ (2nd downward step)
12 @ (3rd downward step)
12 @ (4th downward step)
12 @ (5th downward step)
12 @ (6th downward step)
12 @ (7th downward step)
12 @ (8th downward step)
3 @ $1,726.23
248 @ $1,489.01
1 @ (odd final payment amount)
If your loan documentation software does not provide this fully expanded payment schedule, then you have insufficient evidence of compliance and a violation of Section 226.25 of Regulation Z. Although the abbreviated payment schedule meets the standard for disclosure of the payment schedule, it does not provide the information you need in order to calculate or verify the TOP, FC, or APR.
First published on BankersOnline.com 2/6/12
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