8.9.1.3 Payment Events

You must define one or more payment event to complete a payment pattern. A payment event is a set of payment characteristics, which define the timeline and amount of a specific payment in the payment pattern.

Though the characteristics of the payment phase change based on whether you are defining an absolute, relative, or split pattern, two characteristics are required for all amortizing patterns:

• Payment method
• Value

Payment Method

The payment methods determine the payment amount for the payment event. There are six different methods.

The following table describes the different payment methods.

Table 8-2 List of supported payment methods

Method	Description
% of Original Balance	This method calculates the payment as a percentage of the original balance; the percentage being defined by the input percent. This method is useful for apportioning the starting balance on a level principal instrument over several payments. This method is only available for payment patterns defined with a level principal payment type.
% of Current Balance	This method calculates the payment as a percentage of the current balance before payment; the percentage being defined by the input percent. This method is only available for payment patterns defined with a level principal payment type.
% of Original Payment	This method calculates the payment as a percentage of the original payment column from the detailed instrument data. This percentage is defined by the input percent.
% of Current Payment	This method calculates the payment as a percentage of the previous payment; the percentage being defined by the input percent. This payment is calculated on the payment date based on the characteristics of the instrument at the time of the payment, including the current rate, current balance, and current payment frequency.
Absolute Payment	This is an input payment amount. This amount represents both principal and interest for a conventional payment type and represents only the principal for a level principal payment type. For both types of patterns, absolute value payment amounts are entered as gross of participation.
Interest Only	This is a calculated payment amount. An interest-only payment is calculated during processing as balance times rate times accrual factor.

Value

The value reflects the percentage or payment amount based on the method chosen for the payment event. Value is disabled for phases using the Interest-only payment method.

Payment amounts for conventional pattern phases must reflect both principal and interest payments. Payment amounts for the level principal pattern phase-only reflect the principal portion of the payment. For level principal pattern phases, the total cash flow on a payment date is the principal amount stored as the payment plus the calculated interest.

The payment method and value columns are not displayed for payment patterns defined with a non- amortizing payment type. All payments are assumed to be interested only for this type of payment pattern.