Loan Screens > Account Information Screen Group > Reserves Screen Group > Reserve Analysis Screen > Reserve Analysis tab > Analysis Information field group > Cushion

Entry: System, numeric

F/M: No

Mnemonic:

Screen: Loans > Account Information > Reserves > Reserve Analysis > Reserve Analysis tab

The cushion is determined by your institution using the Cushion field on the Options, Limits & Loan Fields tab. It represents 0, 1, or 2 monthly reserve payments.

This field is calculated with the online analysis. This field will become the “last” cushion if you save this projection. See Analysis Options.

WARNING: Before you enter a cushion, be sure you are in compliance with state regulations and your loan documents.

Three different items control the cushion used on a loan:

1.The Analysis Cushion field on the Reserve Disbursements tab of the Loans > Account Information > Reserves > Account Reserve Detail screen.

2.The Cushion Exceptions field on the Options, Limits & Loan Fields tab.

3.The Cushion field on the Options, Limits & Loan Fields tab.

Two fields appear with the Analysis Cushion field on the Account Reserve Detail screen. The first field is a checkbox that indicates whether the institution wants to use a specific number of months for the cushion for a specific disbursement type when performing the analysis. The default is unchecked. The second field works only if there is a check in the first field. The second field indicates the number of months to be used as the cushion. The number of months can be 0, 1, or 2, with a default of “0” when the first field is checked. These fields function for both online and the afterhours analysis processing.

Information entered in these fields will override information entered in the Cushion field in the Analysis Limits field group and the State or Document exceptions.

Example: The Cushion field is set for 2 months and, on the Account Reserve Detail screen, the Analysis Cushion field is checkmarked and has a “1” for disbursement code 30 (life insurance). Therefore, the analysis will hold two months cushion for all disbursement items except life insurance, for which it will hold only one month.

The hierarchy of all cushion options are:

1.The system looks at the Account Reserve Detail screen. If any reserve disbursement type has a checkmark in the Analysis Cushion field, that is the cushion used for that item only. It does not check further.

2.For any reserve disbursement types with no checkmark in the Analysis Cushion field on the Account Reserve Detail screen, the system looks at the State or Document Cushion Exceptions field on the Options, Limits & Loan Fields tab of the Reserve Analysis screen. If an exception is indicated, that number is used for the cushion. It does not check further.

3.If a loan does not have a checkmark in the Analysis Cushion field on the Account Reserve Detail screen nor does it indicate a State or Document Cushion Exception on the Options, Limits & Loan Fields tab, then the system uses the designated number of months next to the Cushion field on the Options, Limits & Loan Fields tab of the Reserve Analysis screen for analysis.

Another example of when this might be used is if your institution wants to hold 2 months cushion for all loans, but you service loans in a specific state which only allows you to withhold 1 month for taxes.

Reminder: The Analysis Cushion field must be checkmarked before the system will use the number of months set up in that field.

Note: For FHA loans, no cushion is allowed on the mortgage insurance premium (FHA letter 95-20). The system does not include disbursement type 50 (FHA insurance premium) or type 58 (FHA risk-based insurance) in the cushion calculation.