Diagnosing calculation discrepancies
Calculation discrepancies in reverse mortgage loans often stem from incorrect borrower data, property information, or settings. This guide walks you through the systematic troubleshooting steps to identify and resolve the most common issues.
Common calculation issues
Reverse mortgage calculations are complex and depend on many interdependent factors. When you encounter unexpected values, the issue typically falls into one of two categories:
- Incorrect principal limit. The principal limit does not match your expected value, often due to outdated or inaccurate input data.
- Expected rate mismatch. The expected rate used in the calculation differs from what you anticipate, leading to cascading discrepancies in loan amounts.
Both problems require systematic verification of the underlying loan data to resolve.
Troubleshooting in order
Reverse mortgage calculations are sensitive to precision. Follow these steps in the order listed—each builds on the verification of previous data.
Step 1: Verify borrower dates of birth
The date of birth for each borrower is critical to calculating both the principal limit and expected rate. Even a single-day error can shift a borrower into a different age bracket for HECM purposes.
Review each borrower's date of birth in the loan file to ensure it matches their official documentation. Pay special attention to leap year dates (February 29) and month/day transpositions.
Step 2: Verify property value
An incorrect property value has a direct and substantial impact on the principal limit calculation. The principal limit is derived from the property value, so even modest errors compound.
Confirm that the appraised value or purchase price in the loan record reflects the current market assessment. If the property has been reappraised or if there was a data entry error, correct it and allow the system to recalculate.
Step 3: Verify loan type
Different loan types have different calculation rules. Ensure that the correct loan type is selected—for example, HECM versus proprietary reverse mortgage products. Each product applies distinct formulas for principal limit determination.
If the loan type is incorrect, change it to the intended type and observe whether the calculations update as expected.
Step 4: Verify expected rate (HECM loans only)
For HECM loans, the expected rate is a critical input to the principal limit calculation. An incorrect expected rate directly reduces the available funds to the borrower.
Go to the Comparison page to review the expected rate currently applied to the loan. Confirm that this rate aligns with your expectations and with current market conditions. If the expected rate appears incorrect, contact support to investigate the underlying rate data.
Step 5: Verify application and closing dates
The application date and closing date affect the expected rate calculation. Both dates influence which rate period applies and when the loan is considered closed for interest-accrual purposes.
Ensure both dates are accurate and reflect the actual timeline of the transaction. If dates are incorrect, update them and allow the system to recalculate affected fields, especially the expected rate.
What to do if issues persist
After completing all five troubleshooting steps above, most calculation discrepancies should be resolved. The verification process ensures that all inputs are accurate and that the system is working with correct data.
If you have followed the troubleshooting steps in order and the discrepancy remains, please reach out to our support team for further investigation. Provide details of which step revealed the issue (if any) and what values you expected versus what the system calculated.
Was this article helpful?
Your feedback goes directly to the engineer who wrote it.