PROM 671B Mortgage Compliance Tool

The 671B Mortgage Compliance
Tool computes and discloses
mortgage loans with monthly payments.

Several types of mortgages
can be computed.

This is a complex program capable of many 
mortgage-related calculations.  For complete
information, we suggest you download or read on-line
the 671B User's Guide, a PDF file.

Fixed & Adjustable-Rate Mortgages

Computes conventional fixed-rate and adjustable rate mortgages with and without a balloon payment.  Provisions are included for prepaid odd-day interest, "points", and any other fee you wish to include in the prepaid finance charge and APR calculations.

The mortgage term and optional balloon term can be entered in years, or years and months.  Up to 15 interest rate changes can be entered for adjustable rate mortgages.

Odd-days can be entered for mortgages with a long first period.  Either a 365 or 360-day calendar can be used.

Payment & Balance History

After any mortgage is computed, a payment and balance history can be displayed for any adjustable-rate mortgage.  This feature can be used to generate a 15-year "shopping" disclosure for variable rate mortgages.

Interest-Only Mortgages

An initial period can be set where interest-only payments are made.  This is disclosed like an ARM mortgage with two or more payment streams.  This can be combined with the balloon-loan feature to compute an interest-only balloon loan.

Commercial Mortgages

As is common in commercial mortgages, the interest can be charged on an 365/360-day basis.  There are two options in applying the 365/360-day basis. 

The first option increases the payment to reflect the extra interest charge.  A mortgage calculated with this option will have a payment that is slightly higher than a consumer mortgage.

The second option applies to balloon loans only.  The payment is computed conventionally (without applying the 365/360 basis), however the loan is amortized and the balloon payment determined using the 365/360 basis.  This results in the same payment as a consumer mortgage.  The ending balloon payment will be higher than that of a consumer mortgage, reflecting the higher interest charge.

Construction Mortgages

The 671B Compliance Tool calculates two types of Construction Mortgages:

Construction-to-Permanent:  This mortgage has a construction period at the start, the length of which can be from 3 to 24 months.  Then the mortgage becomes a permanent mortgage with a fixed-repayment period.

An initial advance amount can be specified, and the remainder of the mortgage amount is assumed to be advanced in equal amounts over the construction period.

A different interest rate can be charged during the construction period, and the permanent mortgage can have up to 2 interest rate changes.

The Regulation Z disclosure and APR are computed in accordance with Appendix D, Part II, §A1, B, C & D.

Single-Payment Construction:   This mortgage has a construction period that can vary from 3 to 24 months, and has one final payment at maturity.

The Regulation Z disclosure and APR are computed in accordance with Appendix D, Part I(A).

Odd-days & Other Prepaid Charges:  For both the Construction-to-Permanent and Single-Payment Mortgages, the 671B Compliance Tool calculates the construction-period interest based on the estimated amount advanced.

If odd-day are specified in the construction period, they are considered to occur at the start of the construction period.  The odd-day charge (which is a prepaid charge), is based on the initial advance.  The construction period is extended to include the odd days.

You can also specify "points", and other origination fees and/or prepaid charges.

Buyer Qualification Routine

The qualification routine computes the maximum mortgage amount a buyer can qualify for based on his or her income, other debts, loan interest rate and term.  The TDSR (Total debt service percentage) and MDSR (Mortgage debt service percentage) are entered.

Fields are available to enter the buyer's monthly income, annual property taxes and insurance premiums, utilities, and other debt service per month.

The buyer is qualified using both the TDSR and MDSR, and the mortgage amount is based on the highest monthly payment that satisfies both.

Quick Payment Finder

The quick payment finder routines requires only three entries:  amount, interest rate, and term.

The payment is quickly calculated and displayed.

The term can be entered in years and months.  Thus if a mortgage with remaining term of 19 years and 2 months is being assumed by a buyer, the payment can easily be determined at any interest rate.

Annual Percentage Rate/Yield Routine

The 671B has a powerful A.P.R. calculation routine that can be used to compute or verify the A.P.R. or Yield of virtually any mortgage or loan.

The routine can compute the APR of conventional, balloon, adjustable-rate, and adjustable-rate with balloon mortgages.

Up to 20 changes in the payment amount can be entered, enabling one to calculate the APR for skipped and irregular payment mortgages.

Odd-days can be entered to accommodate mortgages with long first period.

Price (Present Value) Routine

This routine is used to determine the present value or price of a stream of payments discounted at the entered interest rate.

It is commonly used to determine the price to pay for a loan based on the desired yield.

Like the APR/Yield routine above, the payment stream can be very irregular, and can have up to 20 changes in the payment amount.

The number of days to the next scheduled payment is entered enabling one to accurately calculate the price to pay for a running mortgage that has less than 30 days to the next scheduled payment.

Refinance Comparison

This routine is used to compute the number of months it will take to recover the costs of refinancing a mortgage at an interest rate lower than the existing rate.

The program calculates the break-even point in months.  If a borrower expects to keep the new mortgage for less than the calculated number of months, the cost of refinancing would not be recovered.

The routine expects the exiting mortgage balance, payment and interest rate.  For the new mortgage, the routine expects the new interest rate, origination fee and/or points as well as any other charges associated with the refinancing, and an investment opportunity rate.

As an example, consider


Balance 43870.00
Payment 448.25
Existing Rate 9.75 %
New Rate 7.00%
Origination Fee 1%
Points 2%
Other Charge 500.0
Investment Rate 4.00%

Computed Results

Remaining Term 196 months
Total Costs to Refinance 1816.10
New Payment 376.24
Payment Savings 72.01
Break Even Point 27 months

HUD Escrow Calculations (Regulation X)

This routine calculates the initial and monthly escrow payments a borrower can be required to make into a mortgage escrow account for insurance and taxes.

The calculations are based on Federal Reserve Board Regulation X, Appendix G.

The routine computes the required initial escrow deposit, the monthly payment to escrow, and the cushion amount.

A schedule of escrow account balances can be displayed.

The lender can select a cushion (minimum balance) from 0 to 2 months (representing 0 to 2/12th of the annual disbursements).

The initial projections are for a new mortgage and are used to calculate both the initial deposit into the escrow account and the monthly payment.

The renewal projections are used to compute the annual adjustment to the monthly escrow payment.  It also calculates any required refunds or shortages.

671B Support

671B Battery Replacement

To change batteries, you should first have the replacement batteries at hand (two CR2032 Lithium batteries are required) and a small screwdriver to remove the two screws on the back of the calculator.

Make sure you install the new batteries with the same orientation (plus and minus) as the original batteries (this is also shown on a diagram on the inside of the back cover). 

The CR2032 battery is available at Radio Shack stores, camera stores or departments, and other places that sell small batteries.  It is round, about 0.75 inches (19 mm) in diameter and 0.125 inches (3.175 mm) thick.

Click here for detailed instructions on changing the handheld calculator batteries (instructions are also in the User's Guide).

You may have to setup the calculator after replacing the batteries.  See Setup Codes or 671B User's Guide.

671B Software Updates

This is a list of the most recent changes together with the date they were made and the software Series number.  The most recent version is at the top of the following list.


Date Series Changes
Oct 2006 L76.1.11 Increase maximum term to 50 years.
Apr 2005 L76.1.10 Add interest-only mortgages.
Apr 2002 L76.1.9 Update to new compiler,
fix minor errors.
Jul 1999 L76 Update initialization routine,
add web address to signoff.
May 1995 K15 Add HUD Escrow Regulation X Routine.
Sep 1993 H92 Add Construction Mortgages.
Mar 93 H30 Minor revisions.
Jun 1993 H34 Allow negative # of odd days in first period in APR routine so APR of mortgages with short first period can be calculated.
Oct 1992 G29 Add Payment History/Balances routine.
Aug 1992 F87 Initial release.

671B Setup Codes

Configuration of the calculator is done through the Setup Routine.  After you press the Setup Function Key, you have to enter a code number to start the routine.  This is a list of the prompts in the setup routine.  Full details are in the 671B User's Guide


Code = 671

Push the [Setup] key and enter this code to access this routine.

CAL BASE xxx? Enter the calendar base to be used for the calculation of odd-day interest.  Enter either 360 or 365.
ARMS Y/N? Push [Yes] to enable the computation of adjustable-rate mortgages, or [No] if you only want to compute conventional, fixed-rate mortgages.  The additional prompts for adjustable-rate mortgages only appear if you respond with a [Yes].
BALLOON Y/N? Push [Yes] to compute balloon mortgages, or [No] if you do not want to compute balloon mortgages.
INT ONLY Y/N? Push [Yes] to be able to compute interest-only mortgages.
(This automatically enables the ARM feature.)
365/360? To compute consumer mortgages, enter a 0 to turn off this option.

If you are computing commercial mortgages and wish to use this feature, enter a "1" or "2" (see below).

Option 1 computes the monthly principal-&-interest payments, odd-day interest amount, and amortizes the mortgage using the "365/360" method.  The message "365/360" will appear at the bottom of the disclosure routine.  This option also affects the payments computed by the Quick Payment Finder Routine.

Option 2, which only applies to balloon loans, computes the odd-day interest amount and monthly principal-&-interest payments in the normal manner, but amortizes the loan using a 365/360 accrual basis.

This method is commonly used for commercial loans with balloon payments.  If there is no balloon payment, Option 2 has no effect on the computations and the results are the same as those achieved with Option 0.

If there is a balloon payment and this option is selected, the message "365/360 ACCRUAL" will appear at the bottom of the disclosure statement.

With either Option 1 or 2, if the mortgage has multiple interest rates, the intermediate balances and balloon payment are computed by amortizing on a 365/360 basis.