Recently we wrote about the changes we made to the DocMagic software's treatment of negative prepaid (also known as "odd-days" or "per diem") interest for Countrywide-specific loan plans to bring them in line with Countrywide's policies. That prior article provides some useful background and is available here.  Since that time, a handful of additional investors have requested comparable treatment of negative per diem interest for their respective loan plans.

Today we announce that all necessary programming changes have been completed to permit DocMagic users to select the same treatment of negative odd-days interest as that which applies to Countrywide-specific loan plans.  The current default handling of negative odd-days interest will remain the same, that is, if there is a credit to the borrower of some amount of odd-days interest, there is a corresponding reduction in prepaid finance charges by the amount of the credit, which in turn results in a lower stated APR (see the earlier article linked to above for additional information).  Now, however, DocMagic users can contact a Customer Service representative and request that if a loan has negative odd-days interest, no deduction be made from finance charges, and negative odd-days interest be ignored for APR calculation purposes, in the same exact manner as applies to Countrywide-specific loan plans. Please note, however, that a credit in the amount of the total negative odd-days interest will appear in the non-prepaid finance charge area of the Itemization of Amount Financed, and the negative odd-days interest will continue to be taken into account and appear in the HUD-1 and any other documents that normally display per diem interest (e.g., closing instructions, funding worksheets and the like).

Please feel free to contact the DocMagic Compliance Department if you have any questions regarding the content of this article.

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