Mortgage Lending

Are You Ready to Handle Biweekly Mortgages?

Biweekly mortgages are currently being offered in a few regions of the country -- primarily the Northeast and Midwest, and recently, in California. A major obstacle to general acceptance of biweeklies has recently been removed and we expect to see an increase in their availability. As of February 1, the FNMA has begun purchasing biweeklies; and the FHLMC has announced its intention to do so. A secondary market for biweeklies as mortgage-backed securities already exists.

Advantages for Consumers

• accelerated build-up of equity in the home
• a savings of almost 30% on total interest paid
• continued enjoyment of tax deductions for mortgage interest

Disadvantages for Bankers

• double the number of payments to process
• in general, a restriction to fixed-rate mortgages
• the almost imperative need for initiating automatic payments for timely processing

Some Solutions

In order to handle biweekly payments correctly, the program must automatically break down the payment among principal, interest and charges, recalculate the interest for the next payment, and advance the payment date for the next two-week payment. LoanLedger+ does all this when you set the customer up for automatic payment status. And, it provides you with an interface, via modem, with Cummins-Allison Corp., Indianapolis, for printing MICR-encoded, preauthorized drafts. According to users, the automatic payments are key to cutting processing costs.

Minneapolis Retirement Fund is servicing about 1,600 first mortgages with LoanLedger+. Loan Servicing Supervisor Tina Hatfield says that cost and customizable reports were strong reasons for purchasing the program. They're handling about 350 biweeklies on the system.

All of their borrowers are members of the retirement fund. All biweekly borrowers are having their payments collected through a credit union or a local bank. These institutions wire the funds to the Minneapolis Retirement Fund, they balance the payments, then "just press a couple buttons, and presto, all the payments are there." According to Hatfield, reversing the preauthorized payment, if payment is not received, is a simple matter.

LoanLedger+ runs on IBM/PC/XT/AT and compatibles, and the System/36 PC, and costs $5,500. To learn more, contact Traude Christeson, Dynamic Interface Systems Corp.

Loan Origination

Loan Origination Program Interfaces Directly with Loan Processing

Called Loan$Writer+, the program comes in modules. Current modules handle prequalifications and printing of standard FNMA application (Form 1003), verification letters, Reg Z, and other origination forms; tracks the progress of the loan as well as the loan documents; and allow you to design your own closing documents. A future module will provide pre-designed closing documents.

Bernal has been using LoanLedger+ to service their home improvement loans for almost three years. He waited for Loan$Writer+ because he wanted the interface capabilities.

Although he has only been using Loan$Writer+'s pre-qualification and tracking capabilities for two weeks, he says all future new loans will be added to the system. They will use it to prepare closing documents as well.

Dynamic Interface Systems Corporation
5959 W. Century Blvd., Suite 1200
Los Angeles, CA 90045 USA
Tel: (310) 568-4567
Fax: (310) 568-0740
email: info@loanledger.com

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