Acceptable Mortgage Accounting Method

The amortization method of individual loan accounting, with interest calculated inarrears, must be used on Loan Participations serviced for MHMFA. In this method, application of an individual mortgage payment of interest and principal is determined by first calculating the interest portion and applying the balance of the constant payment as a principal reduction. The interest is calculated using not less than the outstanding principal balance after application of the preceding payment. The interest so computed applies to the period preceding the due date of the installment being applied. Where computations involve a multiple of installments (such as for delinquent installments), each installment is calculated in succession using a principal balance resulting after the prior calculation and principal application. Similarly, a method which strictly applies payments in accordance with a predetermined amortization schedule is also acceptable. All monthlyinterestcalculationsshall be made using a 30-day month, and a 360-day year.