This is a single-family/residential course.
Special loan features offer prospective borrowers creative financing tools to modify various loan products. Special loan features include items such as different rate options and interest-only payment options. The terms of these loans are generally more complicated, which makes servicing them interesting and challenging. This course provides an overview of special loan features and looks at advantages and risks for the borrower and the servicer.
Special Loan Features begins with a look at how products with adjustable interest rates and payment options impact loan servicing, and the servicer's responsibilities when interest rates and payments change. It continues with a detailed discussion of payment-option loans and interest-only payments. It concludes with a discussion of the step rate feature, which allows for more predictability with adjustable rate loans.
It is important to note that special loan features are rare in today's economic and regulatory environment. Creative options were most popular in late 1990s and early to mid-2000s when lenders were trying to reach as many borrowers as possible, and rising property values made people very confident about their options to sell, refinance, and draw on the equity in their homes. With the credit crisis of 2008, subsequent recession, and heightened regulation, the current market is much more conservative with regard to loan products. Special loan features described in this course, such as payment options and interest-only payments, are only rarely originated at the moment. That said, many loans with these features are still being serviced, and as the economy improves and lending conditions change, some features may become popular again.
Interest Rate and Payment Changes
Seat time approximately one (1) hour.