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6500 - Consumer Financial Protection Bureau


Appendix M2 to Part 1026—Sample Calculations of Repayment Disclosures

The following is an example of how to calculate the minimum payment repayment estimate, the minimum payment total cost estimate, the estimated monthly payment for repayment in 36 months, the total cost estimate for repayment in 36 months, and the savings estimate for repayment in 36 months using the guidance in Appendix M1 to this part where three annual percentage rates apply (where one of the rates is a promotional APR), the total outstanding balance is $1000, and the minimum payment formula is 2 percent of the outstanding balance or $20, whichever is greater. The following calculation is written in SAS code.

data one;

/*

Note:

pmt01 = estimated monthly payment to repay balance in 36 months sumpmts36 = sum of payments for repayment in 36 months month = number of months to repay total balance if making only minimum payments

pmt = minimum monthly payment

fc = monthly finance charge

sumpmts = sum of payments for minimum payments

*/

* inputs;

* annual percentage rates; apr1 = 0.0; apr2 = 0.17; apr3 = 0.21; * insert in ascending order;

* outstanding balances; cbal1 = 500; cbal2 = 250; cbal3 = 250;

* dollar minimum payment; dmin = 20;

* percent minimum payment; pmin = 0.02; * (0.02 + perrate);

* promotional rate information;

* last month for promotional rate; expm = 6; * = 0 if no promotional rate;

* regular rate; rrate = .17; * = 0 if no promotional rate;

array apr(3); array perrate(3);

days = 365/12; * calculate days in month;

* calculate estimated monthly payment to pay off balances in 36 months, and total cost of repaying balance in 36 months;

array xperrate(3);

do I = 1 to 3;

xperrate(I) = (apr(I)/365) * days; * calculate periodic rate;

end;

if expmgt 0 then xperrate1a = (expm/36) * xperrate1 + (1-(expm/36)) * (rrate/365)

* days; else xperrate1a = xperrate1;

tbal = cbal1 + cbal2 + cbal3;

perrate36 = (cbal1 * xperrate1a + cbal2 * xperrate2 + cbal3 * xperrate3)/(cbal1 + cbal2 + cbal3);

* months to repay; dmonths = 36;

* initialize counters for sum of payments for repayment in 36 months; Sumpmts36 = 0;

pvaf = (1-(1 + perrate36) ** -dmonths)/perrate36; * calculate present value of annuity factor;

pmt01 = round(tbal/pvaf,0.01); * calculate monthly payment for designated number of months;

sumpmts36 = pmt01 * 36;

* calculate time to repay and total cost of making minimum payments each month;

* initialize counter for months, and sum of payments;

month = 0;

sumpmts = 0;

do I = 1 to 3;

perrate(I) = (apr(I)/365) * days; * calculate periodic rate;

end;

put perrate1 = perrate2 = perrate3 =;

eins:

month = month + 1; * increment month counter;

pmt = round(pmin * tbal,0.01); * calculate payment as percentage of balance;

if month geexpm and expm ne 0 then perrate1 = (rrate/365) * days;

if pmtltdmin then pmt = dmin; * set dollar minimum payment;

array xxxbal(3); array cbal(3);

do I = 1 to 3;

xxxbal(I) = round(cbal(I) * (1 + perrate(I)),0.01);

end;

fc = xxxbal1 + xxxbal2 + xxxbal3 -- tbal;

if pmtgt (tbal + fc) then do;

do I = 1 to 3;

if cbal(I) gt 0 then pmt = round(cbal(I) * (1 + perrate(I)),0.01); * set final payment amount;

end;

end;

if pmt le xxxbal1 then do;

cbal1 = xxxbal1 -- pmt;

cbal2 = xxxbal2;

cbal3 = xxxbal3;

end;

if pmtgt xxxbal1 and xxxbal2 gt 0 and pmt le (xxxbal1 + xxxbal2) then do;

cbal2 = xxxbal2 -- (pmt -- xxxbal1);

cbal1 = 0;

cbal3 = xxxbal3;

end;

if pmtgt xxxbal2 and xxxbal3 gt 0 then do;

cbal3 = xxxbal3 -- (pmt -- xxxbal1 -- xxxbal2);

cbal2 = 0;

end;

sumpmts = sumpmts + pmt; * increment sum of payments;

tbal = cbal1 + cbal2 + cbal3; * calculate new total balance;

* print month, balance, payment amount, and finance charge;

put month = tbal = cbal1 = cbal2 = cbal3 = pmt = fc =;

if tbalgt 0 then go to eins; * go to next month if balance is greater than zero;

* initialize total cost savings;

savtot = 0;

savtot = round(sumpmts,1)--round (sumpmts36,1);

* print number of months to repay debt if minimum payments made, final balance (zero), total cost if minimum payments made, estimated monthly payment for repayment in 36 months, total cost for repayment in 36 months, and total savings if repaid in 36 months;

put title = ';

put title = number of months to repay debt if minimum payment made, final balance, total cost if minimum payments made, estimated monthly payment for repayment in 36 months, total cost for repayment in 36 months, and total savings if repaid in 36 months';

put month = tbal = sumpmts = pmt01 = sumpmts36 = savtot =;

put title = ';

run;

[Codified to 12 C.F.R. Part 1026, Appendix M2]


Appendix N to Part 1026—Higher-Priced Mortgage Loan Appraisal
Safe Harbor Review

To qualify for the safe harbor provided in § 1026.35(c)(3)(ii), a creditor must confirm that the written appraisal:

1.  Identifies the creditor who ordered the appraisal and the property and the interest being appraised.

2.  Indicates whether the contract price was analyzed.

3.  Addresses conditions in the property's neighborhood.

4.  Addresses the condition of the property and any improvements to the property.

5. Indicates which valuation approaches were used, and includes a reconciliation if more than one valuation approach was used.

6.  Provides an opinion of the property's market value and an effective date for the opinion.

7.  Indicates that a physical property visit of the interior of the property was performed as applicable.

8.  Includes a certification signed by the appraiser that the appraisal was prepared in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice.

9.  Includes a certification signed by the appraiser that the appraisal was prepared in accordance with the requirements of title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and any implementing regulations.

[Codified to 12 C.F.R. Part 1026, Appendix N]

[Appendix N added at 78 Fed. Reg. 10444, February 13, 2013, effective, January 18, 2014; 78 Fed. Reg. 78586, December 26, 2013, effective January 18, 2014]

Appendix O to Part 1026—Illustrative Written Source Documents for
Higher-Priced Mortgage Loan Appraisal Rules

A creditor acts with reasonable diligence under § 1026.35(c)(4)(vi)(A) if the creditor bases its determination on information contained in written source documents, such as:

1.  A copy of the recorded deed from the seller.

2.  A copy of a property tax bill.

3.  A copy of any owner's title insurance policy obtained by the seller.

4.  A copy of the RESPA settlement statement from the seller's acquisition (i.e., the HUD--1 or any successor form).

5.  A property sales history report or title report from a third-party reporting service.

6.  Sales price data recorded in multiple listing services.

7. Tax assessment records or transfer tax records obtained from local governments.

8.  A written appraisal performed in compliance with § 1026.35(c)(3)(i) for the same transaction.

9.  A copy of a title commitment report detailing the seller's ownership of the property, the date it was acquired, or the price at which the seller acquired the property.

10.  A property abstract.

[Codified to 12 C.F.R. Part 1026, Appendix O]

[Appendix O added at 78 Fed. Reg. 10444, February 13, 2013, effective January 19, 2014]

Appendix P–Q to Part 1026—[Reserved]


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