Enhancements to ARM loans

Available: Beta 1/17, Prod 2/14

Which customers are impacted?: Any customers that use Blend for product and pricing for mortgage applications.

How to turn on: 

The ability to capture and display fully indexed rate in Blend will automatically be turned on for all customers on the dates listed above. 

The ability to allow loan team members to manually input the Qualifying rate into the lender application is an opt-in feature that customers can enable at any time. Please reach out to Blend Support or your Blend representative to enable this in your environment(s). 

Purpose of Update and Benefit:

Last summer, we made some updates to the qualifying rate calculations for ARM loans. This release is a follow up to that. 

This release includes two changes:

1. Capture all components for the fully indexed rate: ARM index + margin

2. Allow for a manual input of the qualifying rate

Customers must also enable the feature outlined in the previous release note (linked above) in order to have the benefits of these new features. 

Current Behavior:

Currently, qualifying rate calculations are based on the initial term of an ARM loan prior to adjustment. For some term lengths, there is the concept of a "fully indexed rate" which includes a few components that we did not fully capture.

New Behavior:

Capture all components for the fully indexed rate: ARM index + margin

This feature will be automatically enabled in customer environments on the dates listed above. 

For the 5-, 7-, and 10- year ARMs, they use the fully indexed rate, which is calculated by adding the ARM index and margin. These fields are usually captured by pricing engines, however not every pricing engine gathers this, and therefore Blend was not able to calculate the fully indexed rate. When this feature is enabled, Blend will update our qualifying rate calculations and calculate the fully indexed rate for these ARM loans. 

The ARM index and margin values will appear in MISMO as part of these changes. 

• The ARM index value will be added to DisclosedIndexRatePercent field

• The margin value will be added to MarginRatePercent field

Allow for a manual input of the qualifying rate

This is an optional configuration available for all lenders. Please contact Blend Support or your Blend representative to enable this in your environment(s). 

If enabled, the qualifying rate box that is currently grayed out will now be editable. We will still calculate the qualifying rate, but if a loan team member changes it, then we would no longer calculate it. This is similar to how the net monthly rental income field works currently.

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