Pledged Shares Update (2)

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ULNSCM-01

Loan Secured by Shares Maintenance

2376

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This is the second screen used to set up a share account to be used as security for a loan. Once all fields have been completed, use Enter to record the changes and return to the previous screen.

IMPORTANT: When securing a line-of-credit (MEMBER6) loan, funds must be frozen for the life of the loan, not released as payments are made. (Choose “A” in the Release funds as payments are made field.) This is because the balance of the loan may go up as well as down, and may even be at zero from time to time. Generally funds are pledged against an open credit loan as a way for the member to get a better rate, or for members trying to establish (or reestablish) good credit.

To delete the entire pledged share record, releasing the share funds, use F4-Delete. BE CAREFUL: There will be no confirmation for this procedure.

Field Descriptions

Field Name	Description
Secured seq #	A sequential number assigned to all pledged share records.
Share account	Enter the share account base and suffix number to be used as security on the loan.
Release funds as payments are made	Check this box if you want the frozen amount to be released gradually as the principal goes down. Uncheck this box if you want the system to freeze the total borrowed amount until the loan is completely paid off. (This setting is required if pledging as security on a line of credit loan.)
Loan amount	Enter the total amount of the original loan contract.
Secured percentage	Enter a percentage to indicate how much of the loan amount will be secured from this share account. For example, if this account will only be used to secure half of the loan amount, enter “50” for 50%. HINT: If you know the amount the member would like to pledge, use the following formula to calculate the percentage for this field: Desired Amount Secured / Loan Amount = Secured Percentage Example: Loan is $7,525 and member wants to secure $2,400 from one share account. 2400 / 7525 = 32%
Current secured balance	For new records, leave this field blank and the system will calculate the amount which is secured from this account by multiplying the Loan amount by the Secured percentage. If this is an existing loan for which payments have already been made, this field shows the amount currently secured from this share account. This may also be different from Loan amount if the record is set up to release funds gradually as the balance of the loan goes down.