Roll Schedule Templates

Complexity:    

Audience: Loan Servicer or Collector, Upper Management, Developers, Loan Servicing/Collections Managers, Administrator

Introduction

A typical payment schedule is one that has similar payments and a single interest rate throughout. You may want to customize the payment schedule on your loan. Often, custom payment schedules are reused for certain types of loans within your company. Creating reusable, custom payment schedules is the purpose of roll schedule templates.

How Schedule Roll Works

Roll schedule and schedule roll are terms used in LoanPro to describe a change to the calculated payment schedule for a loan. Custom payment schedules are created one line at a time. Each line of a schedule roll lets you input the following:

Variable

Description

Term

This is the number of payment periods for which the rest of the settings for the current schedule line will apply

Annual Interest Rate

This is the interest rate that will apply over the term for this schedule line.

Solve Using

This option works in conjunction with the amount field and will let you choose how the payment amount will be calculated for the payments in this schedule line. See the options below.

  • Payment: If this option allows you to set the payment amount for this schedule line.
  • Balance: This option will let you solve for payment based on what the balance should be after the payments in this line are made. For example, if you choose balance and then enter $0.00, the payments will be calculated to be whatever they have to be so that the loan will be paid off (have a $0.00 balance) after the Term of this schedule line. This works similarly to the smooth advance tool, that solves for payment using an iterative method to get as close to the payment amount that will cause the principal balance to hit the target amount as it can.

Type

This option is only available if you choose Payment from the Solve Using drop-down. Your selection here can change the Amount/Percent/Payment Calc Terms field. See the options below.

  • Advanced Schedule: Choosing this option will set the Amount/Percent/Payment Calc Terms field to Payment Calc Terms. This option will let you enter a number of payment periods into the Payment Calc Terms field. The number entered will become the remaining number of payments on the loan and the loan will be taken to a $0.00 balance after these payments
  • Dollar Amount: This will set the Amount/Percent/Payment Calc field to Amount. Here you can enter the dollar amount for the payments in this schedule line.
  • Interest Only: If this option is selected, the Amount/Percent/Payment field will no longer appear. Payments will be set to the amount of interest that accrues in a payment period. These payments won’t pay any principal.
  • Interest Only Plus: This option will set the Amount/Percent/Payment Calc field to Amount. The payment amount will be the amount of interest that accrues in a payment period plus the amount you enter into the Amount field.
  • % of Remaining Balance: This option will set the Amount/Percent/Payment Calc field to Percentage. This will calculate payments so that after the payments are made, the principal balance will equal the percentage of the remaining principal balance you entered into the Percentage field.
  • % of Principal: This works just like % of Remaining Principal Balance except the balance after the payments will be a percentage of the original principal balance instead of the remaining principal balance.
  • % of Principal + Underwriting: This works just like % of Remaining Principal Balance except the balance after the payments will be a percentage of the original principal balance plus underwriting fee instead of the remaining principal balance.

Force Balloon Payment

This option lets you choose to force a balloon payment on the loan after the schedule line. This will mean that the next payment after the schedule line is completed will cover the entire outstanding amount on the loan at that point.

Creating a Template

To create a new roll schedule template, navigate to Settings > Loan > Setup New Loan > Schedule Roll Templates.

Click Add to add a new template.

Enter a name for your template in the Name field. Click Add Template Line to add a new line to your schedule.

Enter a term, rate, and other applicable information for the schedule line. Click Save to save the schedule line.

You can enter as many schedule lines as you need to complete your payment schedule. If you don’t enter enough schedule lines to cover the term of the loan, the payment schedule after the schedule roll is exhausted will be like it was in the last schedule line for the schedule roll. You can also set the “Last as Final” drop-down to “Yes” to choose to make the last payment for this line grow or shrink to accommodate late or missed payments so it will truly be the last payment.

Once you have entered all the desired schedule lines for your Roll Schedule Template, click Save to save the template.

Example

Let’s say that you regularly offer 12 month loans with a 3 month introductory interest rate of 5%, but after the first 3 months, the interest rate jumps to 15%. To make a schedule roll template to accomplish this, navigate to Settings > Loan > New Loan Setup > Roll Schedule Templates inside your company account. Click Add to create a new template.

Enter a name into the Name field. We will enter ‘3 Month 5% Promotion’ as the name of this template. Now click Add Template Line to add the first new schedule line.

Enter 3 for the term, since the introductory interest rate will last for 3 months. Enter 5 for the rate as the introductory 5% interest rate. Solve using Payment. Make sure you select Advanced Schedule from the Type drop-down. Since these loans are 12-month loans, we will enter 12 into the Payment Calc Terms box. You could actually choose from many different payment calculation options, but this will calculate the payment amount it would take to have 12 payments pay the loan off. Since these payments will have a 5% interest rate, they will be of a lower amount than the 15% payments. This lets the borrower see the benefit of the lower interest rate. Choose no for Force Balloon Payment and click Save.

Now click Add Template Line to enter the second schedule line.

For the second schedule line, enter a term of 9 since there will be 12 periods in this loan and 3 of them will be taken up by the first schedule line. Enter 15 as the rate, since the rate is going up to 15%. Choose to Solve Using Payment and choose Advanced Schedule from the Type drop-down. Enter Payment Calc Terms of 12. This should keep the loan at 12 payments since the interest was lower at the beginning than it is now, so all the principal should be paid by payments that are calculated at a higher interest rate for a 12-term loan.

Click Save to save the schedule line, then click Save to save the template.

You can now use this template on any loan. It will work correctly regardless of the loan amount.

Default Templates

While creating new roll schedule templates is an option, there are also some default schedules on every loan. In your loan, go to account set up, then select set up terms. Make sure the loan is inactivated to see the roll schedule tab. On the right side, click on the tab that says Schedule tools, then schedule roll. After you select schedule roll, click the tab that says Load. The drop down options will include schedule templates to pro-rate the first payment. These include:

  1. 1 - Prorate 1st Pmt Long Only
  2. 2 - Prorate 1st Pmt Short only
  3. 3- 1st Pmt All

You will also see default templates used to smooth the payment amounts over the life of the loan. These options include:

  1. 4 - Smooth Payment Advance
  2. 5 - Smooth Payment Basic
  3. 6 - Smooth Payment Advance - No Round

Prorate Defaults

Prorate defaults allow the system to automatically increase or decrease the first payment amount based on irregularity of the first period. For example, if the contract date and the first payment date have 45 days between them, and the payment frequency is monthly, this would be classified as a 'long' first period. In contrast, if the contract date and first payment date have 20 days between them and the frequency is monthly, this would be classified as a 'short' first period.

  • Prorate 1st Pmt Long Only: Use this if you have a longer first term.
  • Prorate 1st Pmt Short Only: Use this if you have a shorter first term.
  • Prorate 1st Pmt All: Use this if you want the software to calculate accordingly.
Using this feature may result in a 'straggler payment' at the end of the loan with an amount different from the other loan payments.

Smooth Payments

  • Smooth Payment Advance – Smooths the payment amount over the number of periods you entered for the loan. The Smooth Payment Advance tool will only work with a whole-number loan term.
  • Smooth Payment Basic – Smooths the payment amount over the number of periods that is most simple for the system to calculate. This option should take less time.
  • Smooth Payment Advance – No Round – Smooths the payment amount over the number of periods you have entered for the loan without applying a schedule round. This setting will only work with a whole-number loan term.

Common Uses & Questions

When the payment schedule is non-standard, meaning payment amount changes, this makes it easy to use the schedule roll rather than recreate the schedule each time. Another thing to note, smooth payments also use roll template to smooth the payments equal.

Loan Servicer or Collector Use
You'll need understand that this feature exists and if there is a schedule roll, what is in place and what it is doing. If people are calling you about this, it would be best for you to know how this changes the behavior of the loan.
Upper Management Use
Put in a template that will determine any deviation of a template schedule. Helps to not have changes like interest rate and payment amount over the life of the loan.
Developers Use
You just need to be aware if your company is using a template and what that is, so you can deploy the correct schedule template.
Loan Servicing/Collections Managers Use
It will be important to understand if your company is using a schedule roll and how it behaves to relay it to your company, and if phone calls are escalated to you, you will understand the behavior of loans.
Administrator Use
For those who are configuring LoanPro, its best to know the schedule toll templates so loans are configured the way that you want so you can go forward with the loans and know what to expect.

Can a schedule roll template calculate the payment amount in order to arrive at a certain loan balance at a certain time in the loan? Yes, payment amount can be calculated to get as close as possible to a specific principle balance at the end of that schedule line.

If I have schedule lines in my template with different interest rates, will my payment automatically increase based on the interest rate? No. An increase or decrease in the payment amount based on the interest rate is often referred to as payment recasting. Some lenders like to change interest rates regularly based on changes to prime rate, LIBOR, etc. LoanPro doesn't automatically adjust payment amount when the interest rate changes during the life of a loan. However, when creating a Schedule Roll or Schedule Roll template, interest rate and payment amount can be specified with each schedule line.

What’s Next

With an understanding of these templates, you're ready to Create a Schedule Roll. You might also be interested in these schedule roll features:

  • Force Payments: You can use the force tool to create a schedule roll that automatically adjusts with a schedule round. This article will explain how to use force tool to set up a payment schedule.
  • Smooth Payments: This tool smooths the payment amount over the number of periods that is most simple for the system to calculate. This option should take less time.


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