Configuring the New Volume Amortization Patterns driver

The New Volume Amortization Patterns driver contains amortization patterns that are applied to cash flow calculation method new volume balances. Common amortization patterns come standard with the document. Amortization patterns can be renamed, deleted, and new amortization patterns can be added. Constant Prepayment Rates (CPR) can be incorporated into standard amortization and balloon amortization patterns.

Bullet maturity patterns Bullet maturity patterns are intended for instruments that make a single principal payment at maturity (e.g. CDs). This amortization pattern is characterized by a 100% balance displayed for the number of months indicated in the Term column. The cash flow calculation method will interpret this to mean that 100% of the new volume balance is kept on the books for the duration of the term, after which the full principal is repaid.
Standard amortization patterns

The standard amortization patterns resemble the balance pay down pattern of a fully amortizing instrument that has a constant payment amount, the principal payment portion of which gradually increases over time (e.g. a consumer mortgage).

The amortization patterns are created using Excel’s PMT() function, which is an annuity payment function. A constant payment rate (CPR) can be applied to the standard amortization pattern to simulate an accelerated runoff of the new volume portfolio.
Balloon amortization patterns The balloon amortization patterns are computed nearly the same way as standard amortization patterns, except a balloon payment term is applied. These amortization patterns are suited for instruments that have payments based on long amortization terms but have a shorter balloon term (for example, a commercial real estate loan that has a balloon maturity payment due in three years but has a payment based on a 25-year amortization term).
User Defined amortization User-defined amortization.

Configuring New Volume Amortization Patterns

To configure New Volume Amortization Patterns:

  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 New Volume Amortization Patterns link.

    NOTE: The driver opens in the Desktop Client and displays the AmPattern sheet by default.

  5. Double-click Add New Row(s) to add one or more rows to the Bullet maturity patterns, Standard amortization pattern, Balloon amortization or User Defined amortization sections, as needed.

  6. Scroll to the Bullet maturity patterns section and enter new volume bullet maturity patterns, as follows:

    Column Name Entry Requirements
    Term Enter the number of months for the bullet maturity pattern term in each row.

  7. Scroll to the Standard amortization pattern section and enter new volume standard amortization patterns, as follows:

    Column Name Entry Requirements
    Term Enter the number of amortization term months in each row.
    Coupon Enter the assumed average coupon percentage in each row.
    Month Enter the CPR applied for simulating an accelerated monthly runoff in each row.

  8. Scroll to the Balloon amortization section and enter new volume balloon amortization patterns, as follows:

    Column Name Entry Requirements
    Term Enter the number of amortization term months in each row.
    Coupon Enter the assumed average coupon percentage in each row.
    Balloon Term

    Enter the number of balloon amortization term months in each row.

    NOTE: The balloon term must be less than the term.
    Month Enter the CPR applied for simulating an accelerated monthly runoff in each row.

  9. Scroll to the User Defined amortization section and enter user-defined new volume amortization patterns, as follows:

    Column Name Entry Requirements
    Amortization Pattern Enter the name of the amortization pattern in each row.
    Term Enter the number of amortization term months in each row.
    Month Enter the amortization monthly percentage in each row.
  10. Click the Save button on the Main ribbon to save amortization patterns to the database.
  11. Close the New Volume Amortization Patterns file when input is complete.