Mortgage lenders have recently expanded services to meet borrowers' loan requests by offering lines of credit secured by a primary residence. The Credit Line package offers three different programs:

• Commercial Credit Lines
• Home Equity Credit Lines
• Home Equity Conversion Mortgage (Reverse Equity Loan)

Preparation of Documents

The Mortgage Banker front-end package prepares the documents for the credit line applications, tracking, closing documents, and the related Truth-In-Lending and other required forms. When the credit line has been approved, the data is automatically transferred to Loan Servicing.

Servicing the Loan Until Payoff

Credit Line works in conjunction with the Loan Servicing package. Credit Line controls the loan amount and schedules monthly principal and interest (P&I) payment, while the Loan Servicing package performs the function of collecting and accounting for the scheduled payments. Late charges and ARM adjustments are, also, handled through the Loan Servicing package.

• Automatically updates the new loan balance to Loan Servicing
• Adjust monthly payment based upon
• Loan balance
• Interest rate
• Payment notice to borrower
• Skip payments for teachers or holiday months
• Minimum draw
• Minimum payment
• Fee charges
• Prepare statements or transfer the data to the Mailbox for use in consolidated statements
• The Loan Servicing package handles the payments
• Full Loan Servicing software package
• Handle Escrows and Aggregate Accounting
• Can do Investor Reporting
• Adjust for ARM interest rate changes
• Full collection package

Once a credit line loan has been approved, it is set up in Loan Servicing commencing with a zero balance. Other credit line information is set up in the Credit Line record. Here is the Credit Line package used in a day-to-day operation.

Customers are usually provided with a number of checks to draw against the credit line that has been established. As a customer writes a check for payment of goods or services, the check arrives at the payee institution via the clearing house. The checks with special numbers are routed to the Credit Line department for payment.

The checks come to the Credit Line department via the "Mailbox" or presented manually. The operator using the Credit Line package accepts the draws through the Mailbox or enters the account number and the amount of the check.

The program edits all draws for minimum draw, stop payment, draw period, etc. If the draw can be accepted, the draws for the day are updated and posted to each account, then the balance in Loan Servicing is increased. This is done automatically.

The Credit Line balance reflects the draw and the draw amount remaining. The Loan Servicing record reflects the increased loan amount and adjusts the monthly payment to principal and interest.

There are no limits as to the number of draws to be accepted daily. The draw can be a transaction through a teller window, or a check is written. It is estimated that nearly all the draws are disbursed by a check through the clearing house accounts.

A monthly statement is prepared from the Credit Line package. The data can be passed to the Mailbox for a consolidated statement, or the MC designed statement can be sent to the customer. On the monthly statement is shown the loan balance, payments received, the current unpaid principal balance (UPB), the next payment date and the interest charged computed on a periodic rate.

A payment coupon is provided at the bottom of the statement.

The amount of the credit line can be drawn over the draw period as indicated on the note. The amortization can be calculated over the loan term period or an extended term period from the last draw date.

The loan is serviced using the Loan Servicing package utilizing late notices, assessments, year end statements, payment coupons, and adjustments to the interest rate for ARM loans. All features of the Loan Servicing package are available, including proper handling of Escrows, Investor Reporting, Collections, reporting and reports, and transfer to EDI-PLUS and/or the MTK (Management Tool Kit).

The Credit Line menu screen with the various options is as follows:

01. MANUAL ENTRY DRAW

Manually enter credit line draws. Draws can be made when the credit line is established and throughout the draw period.

02. AUTO ENTRY DRAW

Transactions which are received through ACH and processed through the Mailbox interface.

03. PROOF - CLOSE TO UPDATE

Step 1: To proof the entries made through selections 01 and 02.
Step 2: Close the transaction group after balancing so no further entries can be made. The group is then updated.

04. TRANSACTIONS UPDATE

Updates the Credit Line Record, loan balance, and next P&I payment in the Loan Servicing Master Record, and History Records.

05. TRANSACTIONS REGISTER

Reprint the Transaction Register produced in selection 04. The last Transaction Register is stored until transactions are updated again.

06. CREDIT LINE LISTING

Listing of all credit lines issued showing the original amount and the available line of credit. This can be displayed or printed.

07. CREDIT LINE STATEMENT

A monthly statement indicating Credit Line draws, fee charges, and P & I changes.

08. FEE BILLING

A monthly billing statement for fees and charges incurred during the month.

09. CREDIT LINE RECORD

To set up the information record pertaining to the credit line loan.

10. VIEW/MODIFY

To either view or modify an existing Credit Line record.

11. CREDIT LINE AUDIT

To print a listing of all new credit line loans.

12. MODIFY AUDIT

A printed listing of changes made to credit line loans. This is an important auditing tool to be used in verifying changes were accurate and authorized.

13. YEAR TO DATE HISTORY

Credit Line transaction history for the current month and the previous 12 months.

14. REPORTS AND MAINTENANCE

Where the reports are run and the Credit Line maintenance areas are set up.

15. LS INDEX

Indexes directly to the Loan Servicing Index.

16. LS UPDATE MASTER RECORD

Updates the Loan Servicing Master Record Field 65 P&I, payment for the current period. Credit Line loans coded with a 4 in Field 11 as amount changes will automatically be updated.

Draw Transaction Groups

The Credit Line generates a transaction group that corresponds to the menu selection. Entries are entered to this group. When closed and updated, the groups are cleared and new entries can be entered.

GROUP 01 MANUAL ENTRY DRAW

Direct draws at time of establishing the credit line or manual draws during the draw period.

GROUP 02 AUTO ENTRY DRAW

Draws from the credit line from disbursements at a teller window or credit line checks from the check clearing using the Mailbox.

GROUP 03 REVERSE EQUITY

If a line is set up as a reverse equity line of credit, one advance will be processed each month.

Manual Entry Draw

This selection is to manually enter credit line draws. These draws can be done at the time the credit line is established, or when draws are made throughout the draw period.

This selection is used to receive information for automatic credit line draws. The program reads the draw data from the Mailbox interface file created by your other software vendor.

Upon receiving all Mailbox items, the program generates a transaction group under group 02. AUTO ENTRY DRAW for each item received. This transaction group can be viewed and proofed using selection 03. PROOF - CLOSE TO UPDATE. The final step is selecting 04. TRANSACTION UPDATE.

Print Rejected Items List

All items rejected are listed on the "Credit Line Rejection Items" report. Shown on the report are the Checking Account Number, Credit Line Number, Amount, Check Number, Transaction Code, and Reason for Rejection.

The Credit Line software program does not update as a draw is entered. The transaction draw is held in a group and all entries made to the group are updated at one time. After groups are closed, they can be updated using this selection (05.04). Updating means applying the draw transaction to the line balance. The loan balance is updated in the Loan Servicing Master Record. If a new payment schedule is needed, the payment is updated in the loan Servicing Master Record.

To update the transaction entries, it is necessary the group be closed.

The program will automatically print a Transaction Register when the Update is completed. The Transaction Register is totaled for posting to General Ledger. The group is deleted when the updating and printing are completed. The group is ready to be used again. The Transaction Register can be printed again from selection (05.05), as it stores only the most recent Transaction Register.

Credit Line Transaction Register sample report:

Credit Line Statement

The Credit Line Statement can be printed or transferred through a data transfer file. This option (05.07) is available only if printing the Credit Line Statement from the Credit Line package.

Credit Line Record

A code in the Loan Servicing Master Record Field identifies the loan as a credit line. The loan is set up in Loan Servicing before the credit line data is entered.

Three types of Credit Lines are available:

• Open End
• Closed End
• Reverse Equity

The following screen is the input fields used in the Credit Line package. You can readily see the completeness and flexibility of this package.

This option is to modify the credit line following the initial setup.

This report shows all changes to the Credit Line Master Record, both old and new values. The pages are numbered sequentially by the program, providing an excellent audit to monitor changes being made to credit line loans.

Year-to-Date History prints the Credit Line History for the last 13 months. Additional combined Loan Servicing & Credit Line History can be printed from the Loan Servicing package.

There are reports designed to show:

• monthly summary for the general ledger
• zero balances
• stop draws
• past draw period
• print the Credit Line master

The Data Manager accesses the Loan Servicing fields and the Credit Line Master Record.

Maintenance sets up:

• payment-interest table
• payment-loan amount table
• payment schedule
• fee billing
• remove closed accounts

01. Monthly Interface Summary

This selection is to view or print the monthly summary of information for the general ledger.

02. Days Zero Balance

To view loans that require a zero balance and indicate the number of days. An example would be Commercial Lines of Credit.

03. Stop Draws to Mailbox

What accounts have checks with a stop draw. The program sends all loans having a stop draw, indicated by <A> for ALL or a <Y>, to the Mailbox. Up to five check numbers per account can have a stop draw.

04. Print Credit Line Master

Prints the Credit Line Master in account number range.

05. Past Draw Period

Indicates Credit Line loans with a zero balance and an expired draw period.

The Data Manager will access the Loan Servicing fields and the Credit Line Master Record.

06. Design Report

Generate reports customized by the operator using various records in Loan Servicing. <SCF3>HELP explains the functionality.

07. Print Report

To print reports to laser, file, or other printer type.

08. Payment - Interest Table

If the monthly payment is determined as a percentage of the interest rate, the factor is set up in this selection. This loan amount is multiplied by the factor to establish the monthly payment of P&I.

09. Payment-Loan Amt Table

If the monthly payment is a percentage of the loan balance, the factor is set up in this selection. This factor is multiplied by the loan amount to establish the monthly payment of P&I.

10. Payment Schedule

When and how the monthly payment to P&I was computed can be viewed in the history of a credit line loan. This is primarily used for auditing purposes.

11. Fee Billing Setup

Message lines set up to print on the Fee Billing Notice.

12. Remove CL Accounts

Once a credit line loan has been fully funded or closed, this option will remove the credit line information from the program. A credit line cannot be removed if there is a balance remaining, or within the draw period the balance is zero and monthly billings are still being printed.

LS Index

This selection assesses the Index in the Loan Servicing package. It allows one to index loans by the account number, borrower name, property address, escrow serial number, FHA/VA/PMI number, or investor - loan number.

This selection updates the LS Master Record with the P&I based on the interest rate or outstanding balance.

This process is run automatically for credit line loans when the Credit Line Statement is to be printed (05.07). The only time this process is to be run by the operator is for credit line loans with the Statement Day (Field 21) left blank.