Configuring Loan Delinquency Fine Codes (2)

Description

Code (one character).  This is an alpha-numeric field.

• NOTE: Leave the delinquency fine code field blank on the loan update screens to indicate “no delinquency” (no delinquency fines are assessed). Zero is an available fine code.

Enter a description of the fine type. This will appear on inquiry screens, so it may be helpful if the description explains how the fine is calculated, such as “4% of daily int. due” or “5% of regular pymt” or something similar.

These fields indicate when this delinquency fine will be assessed by the system. This is sometimes referred to as the “grace period” before a delinquency results in fines.

The day on which the fine is assessed will vary depending on whether your credit union monitors delinquency during beginning-of-day or end-of-day processing. As an example, say a member is due on March 5 and the defined “grace” is 10 days. With beginning-of-day monitoring, the fine would be assessed on March 15; with end-of-day monitoring, the fine would be assessed on March 16.

• Remember, a member who misses a payment is considered “delinquent” the very next day after the normal payment is due. Therefore, inquiry and collections screens flag any member who is even one day past due. However, this feature allows a credit union to wait to assess a fine until a certain “grace period” ends.

If this flag is set to Yes, the system will not add a fine to a loan account if the current date is greater than the loan's maturity date. (If allowed by regulation and appropriate according to your disclosures, you could set this flag on so you can let loans go past their maturity date and not have to worry about fines being assessed.)

• IMPORTANT: This is allowed only in certain states according to state regulations (such as Wisconsin). Be sure to verify your state's rules and also review your disclosures before activating this flag!

If this flag is set to Yes, the system will consider any payments made during the current payment cycle* as being made for the current month, and therefore will not add any additional fines, even though the loan's next payment date might still be in arrears.

*In this context, the cycle is actually measured from one month's grace period to the next month;'s grace period. If you have a 10-day grace before fines kick in, this means that any payment made between February 11 and March 10 is considered to be March's payment.

• IMPORTANT: This is allowed only in certain states according to state regulations (such as Wisconsin). Be sure to verify your state's rules and also review your disclosures before activating this flag!

Choose one of the following to indicate how the fine amount should be calculated:

Percentage (P) - With this method, the fine amount is calculated as a percentage of the loan payment or interest due. Be sure to complete the additional fields pertaining to the percentage method, described below.

Flat Fee (F) - With this method, the fee will be the same regardless of the account balance, delinquent amount or interest due. Be sure to complete the additional field pertaining to the flat fee method, described below.

If using the Percentage calculation method, an entry is required in this field. Choose one of the following:

Amount delinquent when less than scheduled payment (A) - Use the total amount that is delinquent multiplied by the percentage when calculating the fine. If the amount delinquent is more than the normally scheduled payment, the system will use the scheduled payment amount instead. The next time a fine is calculated, the amount will be added to any existing outstanding fine.

For example, if the member is delinquent by $50.00, and the regular payment is $175.00, the system will multiply $50.00 by the percentage amount to determine the fine.

Click here to see examples of this method.

Interest per day, daily per diem (D) - Fines are calculated as a percentage of interest due. With this method, when the loan first goes delinquent the fine is calculated as a percentage of total interest due. On each subsequent day, the fine is calculated based on the interest per diem and added to the outstanding fine due.

Click here to see examples of this method.

Interest per day, single amount per period (I) - Fines are calculated as a percentage of interest due. With this method, the fine is only calculated once per period, using the payment frequency period on the loan (i.e., monthly, quarterly, etc.). The next time a fine is calculated, the new fine amount is added to any outstanding fines due.

Click here to see examples of this method.

• HINT: The main difference between the “Interest per day, daily diem” and “Interest per day, single amount per period” options is most evident when a payment is made between Fine Calculation Dates. With the “Interest per day, daily per diem” method, the fine would be higher because it would have been calculated again every day. With the “Interest per day, single amount per period” method, the fine would be the same as it was when the fine was last calculated.

Scheduled payment (P) - Use the amount of the normal loan payment multiplied by the percentage when calculating the fine. The next time a fine is calculated, the amount will be added to any existing outstanding fine.

For example, if the member's normal payment is $125.00, the system will multiply $125.00 by the percentage amount to determine the fine.

If using the Percentage calculation method, use this field to enter the percentage figure. This is multiplied by either the loan payment, the interest due per cycle, or the interest due by day (as specified in the previous field) to determine the fine amount.

If using the Percentage calculation method, enter a minimum fee to be charged. If the system calculates a lower fee than this minimum, the amount entered here will be used instead.

• NOTE: The system only looks at this amount the first time a fine is calculated after the loan goes delinquent. After that point, new fines are calculated and simply added to the outstanding fine amount.

If using the Percentage calculation method, enter a maximum fee to be charged. If the system calculates a higher fee than this maximum, the amount entered here will be used instead.

If using the Flat Fee calculation method, enter the default delinquency fine (dollars and cents) which should be charged for every loan flagged with this code.

Click here to see examples of this method.

Enter the G/L account number to be used to record the income from fines that are assessed to members, once the fines are actually paid.

Description

Use this to suspend the delinquency fine code so that it can no longer be used for new or existing loan accounts. Return to this screen and use Enter to reactivate the code.

Use this to cancel all changes and return to the Home Page.

Use this to delete the delinquency fine code completely.

• BE CAREFUL: There will be no confirmation. If unsure, use the Suspend button instead.