Loans > Loan Screens > Account Information Screen Group > ARM Information Screen > ARM Detail tab

The Rate Information field group on the ARM Detail tab of the ARM Information screen contains rate information for the account.

laiarmi_rateinfo

The fields in this field group are as follows:

Field

Description

Current Rate

Mnemonic: LNAMRT or LNRATE

This field contains the rate at which interest is accrued on the loan. A rate of 12% would be displayed as “12.00000.” This is the interest rate on loans that use payment method 7 or payment method 6 with the Use ARM Fields checkbox checked.

File maintenance to this field is done on the ARM Rates & P/I Tables tab. The GOLDWriter mnemonic for this field is LNAMRT. However, LNRATX is the loan effective rate, which means if you use this mnemonic, the system will use the effective rate based on the type of loan (i.e., payment method 7 would use LNAMRT, LIP would use LNLRAT, and LNRATE would be used for all other loans).

Next Rate

Mnemonic: LNAMNA

This field contains the next rate to be used for this loan. It becomes effective with the payment due on the Next Rate Change Date below. This rate rolls into the Current Rate (above) when the payment associated with this rate is posted. File maintenance to this field is done on the ARM Rates & P/I Tables tab.

Prepayments

The system can only accept prepayments up to the installment associated with the next rate change date. The loan cannot advance beyond the next rate change date unless a rate exists in the Next Rate field.

When the prepayment is posted, the system will move the rate in this field to the Current Rate field . The Next Rate field will be left blank until the next rate is calculated.

	WARNING: If you enter a rate in this field, instead of allowing the system to automatically calculate the next rate, the system will skip the next rate calculation. File maintenance of this field should be done with caution.

Next Rate Change Date

Mnemonic: LNAMDT

This field contains the date of the next rate change on the loan in MMDDYY format. File maintenance to this field is done on the ARM Rates & P/I Tables tab. All rates will roll automatically in accordance with the rate change frequency and this date.

	Note: The open new loan transaction 680 will automatically place this date in the First Rate Change Date field below if that field is blank.

Rate Change Frequency

Mnemonic: LNAMFQ

Enter the frequency (in months) the rate will change on this loan. A six-month change would be entered as “6.” This field must be greater than zero. For loans that do not have rate changes for the first 3, 5, 7, or 10 years, but yearly thereafter, refer to Two-Step Loans.

Days Before Rate Change

Mnemonic: LNAMAD

Enter the number of days prior to a rate change that you want the new rate to be calculated and the notice of the change to be generated.

Index Rate Pointer

Mnemonic: LNAMPT and RTCL34

Select the index rate pointer to be used for this account. Index rate pointers and descriptions are institution-defined and entered in Loans > System Setup Screens > Interest Rate Table screen.

Interest Rate Margin

Mnemonic: LNAMOF

This field is used in conjunction with the Index Rate Pointer above. It can be either positive or negative to allow points above or below the index rate.

Round Rate

Mnemonic: LNRRND, LNRRTQ, LNNRRS, and LNRR10; LNRDUP and LNRDDN

Two fields control how rates are rounded each time a new rate is calculated. See below for more information.

The first drop-down list determines if the rate is rounded up, down, or to the nearest rate. The second drop-down list determines what decimal the rate should be rounded to.

Up, Down, Nearest Field

Using this field will round the following rates:

FIELD

MNEMONIC

P/I Payment Rate

LNRATE

LIP Next Rate

LNLNXT

Next Rate

LNAMNA

Next Guaranteed Rate

LNIGNX

Next Payment Rate

LNAMNI

The default value is “Nearest.”

If you select “Up,” the system will round up to the nearest 10th or 8th depending on what is in the first Round Rate field. An example of rounding up would be if the interest rate calculated is not an even 1/8th or 1/10th, the system will increase the interest rate until it is an even 1/8th or 1/10th. (That is, the interest rate may be 8.32, but in order to round to 1/10th the system must add .08 to round the rate to 8.40.)

“Down” will round down to the next possible 1/8th or 1/10th parameter. It would push 8.32 down to 8.3. Even if the rate calculated had been 8.39, the system would still round the rate down to 8.30.

“Nearest” uses established rounding rules: if less than 5, round down to the nearest, if 5 or greater, round up to the nearest. Thus, 8.32 would be rounded to 8.30 if “Nearest” had been entered in this field, and 8.35 would round up to 8.40.

Once the index rate is pulled from the Interest Rate Table and the margin is added to or subtracted from it, the rate is then rounded based on these fields. If caps or maximum and minimum fields are used, rounding is performed prior to comparing to those fields.

Round Rate Field

ROUNDING RATE

MNEMONIC

No rounding (default)

Not defined

Eighths (1/8)

LNRRND

Quarters (1/4)

LNRRTQ

Sixteenths (1/16)

LNNRRS

Tenths (1/10)

LNRR10

WARNING: If you are rounding rates, the percentages in the Lifetime Maximum Rate Cap, Lifetime Minimum Rate Cap, Maximum Points Up, and the Maximum Points Down fields should be rounded to the same factor (1/8, 1/4, etc.). If the rounding factors don't match and the max/min is the newly calculated rate, then the rounding is thrown off because the max/min rate is used. Example: If you are rounding to eighths (1/8), you shouldn't have maximum/minimum rates of tenths (1/10) set.

Last Index Rate

Mnemonic: LNAPIN

This is the last index rate used (pulled from the ARM Rates & P/I Tables tab). This is the interest rate used on this loan before the Current Rate above. If this field is blank, then this is the first interest rate for this loan.

The interest rate margin would have been added to or subtracted from this rate to determine the actual loan rate. This rate is used on the rate change notice to the borrower when disclosing the last index. File maintenance of this field should be done with caution.

For delinquent loans the index rate appearing here does not match the rate for the delinquent payment. It displays the rate as if the loan were current. To see the rate for the delinquent payment you must look in the history of the loan. It will appear in the history as “LST RT IND.”

Original Rate

Mnemonic: LNAMOA

This is the original note rate or the original fully indexed rate on ARM loans with a Teaser Rate (see below). This field will be used in the rate change notice to the borrower if the notice requires the original note rate.

Original fully indexed rate means the full value of the current market index plus the Interest Rate Margin (see above), at the time the loan is made. For example, if the index rate is 4.5%, and the loan has a margin of 1%, the fully indexed rate would be 5.5%.

The Original Rate field is used to calculate the new interest rate if the Use This Base Index Rate checkbox field below is marked.

This rate can also be used in the deferred fees and income calculations with amortization method 3 (interest method), depending on institution options.

Teaser Rate

Mnemonic: LNTSRT

This is a memo field that displays the teaser rate. This rate is only used on the CMR Report (FPSRP117). When a loan is originated, the teaser rate would have been entered in the Current Rate field above.

WARNING: For new loans with caps, the following fields must be manually entered:

Rate at Period Start

Start of Accrual Period

Length of Rate Cap Period

First Rate Change Date

Mnemonic: LN1ROL

This is the date the loan changes rates for the first time. It can be manually entered or the “open loan” tran 680 will automatically place the date in the Next Rate Change Date field above into this field if this field is blank. This date is only used on the CMR Report (FPSRP117).

A GOLDWriter work field, LNWLMTH, is available that calculates the number of months between the open date and the First Rate Change Date.

Use this Base Index Rate

Mnemonic: LNBSIN and LNBINX

If the Use This Base Index Rate field is checked (Yes), the Base Index field (unnamed field to the right of the Use This Base Index Rate checkbox) and the Original Rate field will be used to calculate the new interest rate on the loan.

To calculate the new interest rate, the system determines the change between the Base Index field and the Current Rate field. If the amount of the change is less than an eighth/tenth/quarter of a percentage point, the change will be rounded to zero. If the amount of the change is an eighth/tenth/quarter or more, the amount of the change will be rounded up/down/nearest to the eighth/tenth/quarter of a percentage point.

If the current index figure is larger than the Base Index field, the rounded change amount will be added to the Original Rate. If the current index figure is smaller than the base index figure, the rounded change amount will be subtracted from the Original Rate.

If there is no change between the Base Index field and the current index figure after rounding, the Original Rate will become the new interest rate.

This calculation also considers lifetime maximum and minimum rates, as well as rate caps, meaning maximum points per period upward or downward.

Example:

Original Rate: 8.875

Base Index: 6.61

Current Index: 4.59

BASE INDEX - CURRENT INDEX = INDEX CHANGE

6.61 - 4.59 = 2.02

rounded to nearest one-eighth = 2.00

ORIGINAL INTEREST RATE - CHANGE AMOUNT = NEW INTEREST RATE

8.875 - 2.00 = 6.875

	WARNING: If the loan is set up to use the Use This Base Index Rate field and the Base Index field, and the loan is sold to an investor, you must use the service fee type code “C” (constant) and have a service fee rate entered on the Loan Investor Fields screen.