

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
mortgagerelated calculations. For complete
information, we suggest you download or read online
the 671B User's Guide, a PDF file.

Fixed & AdjustableRate Mortgages

Computes conventional fixedrate and adjustable rate mortgages with and
without a balloon payment. Provisions are included for prepaid oddday 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.
Odddays can be entered for mortgages with a long first period.
Either a 365 or 360day calendar can be used.
Payment & Balance History
After any mortgage is computed, a payment and balance history can be
displayed for any adjustablerate mortgage. This feature can be used to generate a 15year
"shopping" disclosure for variable rate mortgages.
InterestOnly Mortgages
An initial period can be set where interestonly payments are
made. This is disclosed like an ARM mortgage with two or more payment streams. This can
be combined with the balloonloan feature to compute an interestonly balloon loan.
Commercial Mortgages
As is common in commercial mortgages, the interest can be charged on an
365/360day basis. There are two options in applying the 365/360day 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:
ConstructiontoPermanent: 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 fixedrepayment 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.
SinglePayment 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).
Odddays & Other Prepaid Charges: For both the
ConstructiontoPermanent and SinglePayment Mortgages, the 671B Compliance Tool calculates the
constructionperiod interest based on the estimated amount advanced.
If oddday are specified in the construction period, they are considered
to occur at the start of the construction period. The oddday 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,
adjustablerate, and adjustablerate 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.
Odddays 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 breakeven 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
Parameters

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 interestonly 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 oddday
interest. Enter either 360 or 365.

ARMS Y/N?

Push [Yes] to enable the computation of adjustablerate mortgages, or
[No] if you only want to compute conventional, fixedrate mortgages. The additional prompts
for adjustablerate 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 interestonly 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,
oddday 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 oddday
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.

2021.09.15
