Navigation:  Loans > Loan Screens > Account Information Screen Group > ARM Information Screen > ARM Detail tab > Rate Information field group > Two-Step Loans

Loans that have no rate change for an extended period of time, but then begin to change on a regular frequency thereafter, are called two-step loans. For example, a new loan that does not have a rate change for the first three years, but then has rate changes yearly thereafter, would be a two-step loan.

 

To set up a loan like the example above, you could enter a rate change frequency of 12 with the first rate change three years in the future. If you do this, the loan would appear on the Loan Warning Report (FPSRP083) with the warning message “RATE TABLE AND ACCR RATE DO NOT MATCH.” You can stop the loan from appearing on the report by using action dates and the following action codes:

 

 32 (3-year adjustment)

 33 (5-year adjustment)

 34 (7-year adjustment)

 35 (10-year adjustment)

 

If the action date is after the report run date, the loan will not appear on the report.

 

For example, a loan opened on 10-1-07 with the first rate change on 10-1-10 (3 years) and yearly rate changes thereafter (frequency of 12). By placing action code 32 and action date 10-1-10 on the loan, it will not appear on the report.