Category:Investment Pools

Investment pooling takes the concept of investment support and carries it a step further. Investment support allows a borrower to use multiple investments to support a single loan. In an investment pool, however, there can be multiple investments supporting multiple loans. The goal of both is to provide the borrower the most attractive lending rates possible.

The DDI-Connect Investment Pools system enables your organization to link a group of investments to a group of loans in order that the support provided by the investments will contribute to lower lending rates. When part of an investment pool, a loan has three potential sources of supporting information that can contribute to its interest rate:

• The investment pools linked to the loan
• The investment support on the (non-pooled) loan
• The base loan interest rate

The system runs through a series of calculations to determine the effect (if any) of each on the interest rate of each loan in the pool. The factor − investment pool or investment support − with the lowest weighted-average interest rate is calculated first. Then the other is calculated. If there is any remaining unsupported amount of the loan balance, the base loan interest rate is used to determine the interest rate for that portion.

Depending upon the part of the loan balance that’s supported, one to three of the factors listed above may be required in order to calculate the loan interest rate. DDI-Connect continues to move on to the next source until the loan balance is fully supported and the resulting interest rate is determined.