ATTENTION: Please Contact Customer Service When an Investor's Prepayment Penalty Addendum/Rider Includes a Soft Prepayment Provision

When entering data for a loan that involves a "soft prepayment" provision, the DocMagic user normally enters the number of months in the "Prepayment" field to represent the period of time under which the borrower is subject to a prepayment penalty on their loan and the number of months in the "Soft Prepayment" field to indicate the number of months under which the "soft prepayment" period applies. (See "Screen Shot 1" below.) The multistate prepayment addendum and/or rider that include a "soft prepayment" provision then automatically generates in the loan package.

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Screen Shot 1: The above screen shot illustrates how the "Prepayment Penalty" fields are typically input.

However, inputting the number of months in the "Prepayment" and "Soft Prepayment" fields can become a little tricky when certain investor-specific plans are involved. Investor-specific requirements may involve inputting data in these fields differently from the usual method in order for the investor's prepayment penalty addendum/rider to be generated. For this reason, Document Systems, Inc. recommends that the Customer Service Department be contacted to determine whether the "Prepayment" and "Soft Prepayment" fields require special input when working with an investor's plan. Furthermore, a certain plan code may need to be selected in order for a prepayment penalty addendum/rider containing a "soft prepayment" provision to be generated.

For Example, Aurora Loan Servicing/Lehman Brothers ("Aurora") is an investor that has "soft prepayment penalty" requirements. If an Aurora loan has a prepayment term of 36 months and only the first year of the loan term is subject to a "soft prepay," the user must input "36" in the "Prepayment" field and "12" in the "Soft Prepayment" field. This is how the "Prepayment Penalty" fields would be normally inputted. (See "Screen Shot 1" above.) But, if the entire 36 months is a "soft prepayment" period, then the user inputs "36" in the "Prepayment" field and "0" (zero) in the "Soft Prepayment" field, as shown in "Screen Shot 2" below.

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Screen Shot 2: The above screen shot illustrates how to input the "Prepayment" fields to generate a Prepayment Penalty Addendum/Rider containing a "soft prepayment" provision for Aurora loans, where both the prepayment penalty period and soft prepayment periods are 36 months.

IndyMac Bank ("IndyMac") is an investor that has specific prepayment forms but does not require special input in the "Prepayment Penalty" fields. For this particular investor, the terms are entered into the "Prepayment Penalty" fields the way they would normally be inputted to obtain the multistate version of the prepayment penalty addendum/rider. (See "Screen Shot 1") That is, the user inputs the number of months in the "Prepayment" field for the prepayment penalty period and the number of months applicable to the "soft prepayment" provision in the "Soft Prepayment" field.

What is unique to IndyMac is that the correct plan code must be selected in order to obtain a prepayment addendum/rider with a "Soft Prepayment" provision. The hard and soft prepayment penalties are separated by "Prime" and "Subprime" plan codes; so, it is critical for the DocMagic user to select the correct plan. (See "Screen Shot 3" below.) Prime plan codes have the soft prepayment plans, and subprime plan codes have the hard/standard prepayment penalty plans. To view the IndyMac plans, click here.

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Screen Shot 3: As shown above, make sure to select the correct IndyMac Plan Code so that the correct prepayment penalty addendum/rider generates. With the exception of Plan Code "12MATINM," Plan Codes containing the letter "P" are prime loans containing "soft prepayment" provisions. Plan Codes containing the letters "SP" are subprime plan codes containing "hard prepayment penalty" provisions.

IndyMac and Aurora loans are just two examples that require special input to generate prepayment penalty addenda/riders containing soft prepayment provisions. Please contact the Customer Service Department at (800) 649-1362 if you are making investor-specific loans containing soft prepayment provisions to determine whether special inputting in the "Prepayment Penalty" fields is required.

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