Configuring Cash Flow Forecaster driver

The Cash Flow Forecaster driver includes settings used to control cash flow forecaster-related drivers.

Opening the Cash Flow Forecaster driver

Cash flow forecaster drivers are unique to each file group.

To configure the Cash Flow Forecaster drivers file:

  1. From the Command Center home page, click Financial Planning.
  2. Open the budget, scenario, or forecast for which to edit the driver.
  3.  Click the Drivers & Assumptions tab.

  4. Click the Cash Flow Forecaster Drivers link.

    NOTE: The driver opens in the Desktop Client.

Settings sheet

To configure the Settings sheet:

  1. Complete the configuration of the following options:

    Option Description
    Use alternate payment schedules

    Do the one of the following:

    • To enable the Cash Flow Forecaster to use principal payment amounts that are present in the AlternatePaymentSchedules table, select Yes.
    • To enable the Cash Flow Forecaster to ignore any alternate payment amounts stored in the AlternatePaymentSchedules table, select No .
    Additional multipass filter for Cash Flow Forecaster

    NOTE: This setting is optional.

    The base multipass filter applied to Cash Flow Forecaster is “ITYPE IN ('A','F') AND AX_CurBal > 0 AND AX_IsNonMaturity = 0.”

    Do one of the following:

    • To apply additional multipass data filters, add additional data filter criteria.

    • If no additional data filter is required, leave the field blank.
    Default OfficerID for super instruments

    NOTE: This setting is optional.

    The default OfficerID is applied to cash flow records that are aggregated into super instrument IDs (see Sum CFF results into super instrument ID).

    If cash flow results are aggregated into super instrument IDs, then select the default OfficerID from a valid OfficerID found in the Officer table.
    Enable cash flow forecaster logging

    Do one of the following:

    • To enable Cash Flow Forecaster to perform a series of quality assurance checks on the cash flow results of every instrument processed and save any messages related to questionable results to the CFFLog table, select Yes .

      NOTE: You can access CFFLog records using the Cash Flow Forecaster Log reports (see Sum CFF results into super instrument ID).

    • If you do not need Cash Flow Forecaster to log messages about calculated results, select No .
    Seed CFFDrivers sheet from another CFF drivers table?

    NOTE: This setting is optional.

    Do one of the following:

    • To seed the CFFDrivers worksheet of the Cash Flow Forecaster driver with CFF driver settings from another file group, select Yes .
    • To not seed the CFFDrivers worksheet of the Cash Flow Forecaster Drivers file with CFF driver settings from another file group. select No .
    Source CFF drivers table

    NOTE: This setting is optional.

    If you selected Yes in the Seed CFFDrivers sheet from another CFF drivers table field above, do the following:

    1. Double-click the ellipsis to the left of the field name.

    2. In the Choose Value dialog, select the appropriate CFF driver tables.

    3. Click OK.

  2. In the Main ribbon tab, click Save.

  3. Continue to the PrepaymentRates tab.

PrepaymentRates tab

As an optional step, the PrepaymentRates sheet allows you to create and populate multifactored payment rate tables.

TIP: While it is not required to process the Cash Flow Forecaster, we recommend configuring this sheet to help project prepayments more accurately.

Axiom’s multifactor prepayment rate tables allow annual prepayment rates to be defined by using the following factors.

To configure the PrepaymentRates tab:

  1. To add a prepayment category, click the Add a prepayment category link.

  2. In the Calc Method Variables dialog, complete the following, and click OK:

    Option Description
    Prepayment Category

    You can define the prepayment category for a product or a group of products. You enter this content into the field free-form.

    For example, to create a prepayment category for 5/1 30 year ARM products, you would type "5/1 30 year ARMs" or to create a generic prepayment category for residential mortgages, you would type "Residential Mortgages".
    Refinance Incentive Market Index

    For Cash Flow Forecaster to properly quantify the refinance incentive, select the market rate upon which the refinance incentive will be based.

    To select an index, click Choose Value, select the index, and click OK.

    TIP: The interest index you select should be the prevailing interest index. The system displays the codes from the InterestIndex table.
    Refinance Incentive Range Number The difference between the loan rate and the selected market rate. Used to determine the incentive to prepay a loan.

  3. Axiom inserts the new prepayment category table, populated with inputs for which you were prompted. Populate the minimum and maximum coupon rate minus market rate for each refinance incentive range number in ascending order. Prepayment rates should have a positive relationship with the spread between the coupon rate and the market rate – as the spread increases so does the prepayment rate.

    TIP: By default the prepayment rate table has 20 distinct refinance incentive ranges. If 20 refinance incentive ranges exceeds the desired layout, delete the unnecessary ranges from the calc method after it has been inserted. Always delete calculation method rows from the bottom up as columns hidden to the left have formulas that are dependent upon preceding rows.

    NOTE: Prepayment categories listed in column W of the PrepaymentRates sheet correlate to the MultiFactor Prepayment Category in column V of the CFFDrivers sheet.

  4. Populate prepayment rates in each projected month of each refinance incentive range.

    NOTE: Listed Prepayment Category descriptions in the PrepaymentRatesTable worksheet correlate to the MultiFactor Prepayment Category column of the CFFDrivers sheet.

  5. In the Main ribbon tab, click Save.

  6. Continue to the CFFDrivers tab.

CFFDrivers tab

This worksheet works as follows:

  • If in the Settings sheet, you selected Yes for the Seed CFFDrivers sheet from another CFF driver table? option, this sheet populates with drivers from the table you selected.
  • If you selected No for the Seed CFFDrivers sheet from another CFF driver table? option, the sheet populates with drivers previously saved.
  • If no drivers have been saved, the system returns with a list of blank records, grouped by ACCT/PROD/ITYPE, from the InstModelStg (Instrument Model Staging) table.

TIP: The system adds new ACCT/PROD/ITYPE combinations not present in the CFFDrivers worksheet to the worksheet. As a result, you will need to configure settings for those new items.

To configure the CFFDrivers tab:

  1. Configure the following options for each account (ACCT), product (PROD), and interest type (ITYPE) combination:

    Option Description
    Sum CFF results into a super instrumentID

    To conserve table space and optimize CashFlow table query performance, the Cash Flow Forecaster engine can sum instrument level results by account/product/interest type/department into what is called a Super InstrumentID.

    The Cash Flow Forecaster saves 11 records for every instrument processed which, depending on the size of the data file and how many cash flow forecaster result sets are archived, could result in millions of records in the CashFlow table.

    TIP: Very large tables can have slow query performance.

    This setting may be disabled (set to FALSE) per row. For example, it may make sense to leave this setting as TRUE for large consumer portfolios such as auto loans or mortgage portfolios that have high volumes and low balances, but set as FALSE on commercial loans that have low volumes and high balances.
    Use a multifactor prepayment rate

    NOTE: This setting is optional.

    Do one of the following:

    • To a multifactored prepayment rate rather than the Default CPR for the account/product/interest type combination, select TRUE.

    • To use the default Constant Prepayment Rate (CPR), select FALSE.
    Multifactor prepayment category

    NOTE: This setting is optional.

    If you selected TRUE for the Use a multifactor prepayment rate, select a prepayment category from the PrepaymentsRatesTable worksheet. Double-click on the ellipsis that appears to the left of the Multifactor prepayment category column. See Axiom's multifactor prepayment rates table for more information about creating multifactor prepayment rates.
    Default CPR

    NOTE: This setting is optional.

    The system converts the default CPR into a single month mortality rate (SMM) and applies it to each month in the Cash Flow Forecaster.

    NOTE: The system applies the default CPR in the event that Cash Flow Forecaster fails to find a multifactor prepayment rate. Cash Flow Forecaster will fail to find a multifactor prepayment rate only when the Use a multifactor prepayment rate is set to TRUE and the MultiFactor prepayment category is either blank or does not match prepayment categories created on the PrepaymentRatesTable worksheet.
    Do not use instrument prepayment data

    NOTE: This setting is optional.

    This setting only applies when prepayment types and prepayment rates are included in instrument records (the Treasury table may contain prepayment data for CMOS and MBS).

    Do one of the following:

    • To allow the CFF utility to use instrument prepayment data if it exists, select FALSE .

      NOTE: CFF will only use prepayment data from the driver table for instruments that do not have prepayment data.

    • To ignore record data and only use prepayment information mapped from the driver table, select TRUE.

  2. On the Axiom ribbon tab, click Save.

  3. Close the Cash Flow Forecaster driver file.

The Cash Flow Forecaster is now ready for use. See Running the Cash Flow Forecaster for more information.