Navigation:  Teller System > Transactions > Loan Transactions > Appendix C

Foreclosure / Repossession / Partial or Full Charge-off

 

The following items provide general information on foreclosed, repossessed, or charged-off loans.

 

•See the following links to specific transactions for charge-offs and repossessions. These transactions perform much of the file maintenance and G/L posting.

 

oTran code 2022-01, Charge-offs

oTran code 2203-00, Repossession Transaction

 

•Refer to the following reports:

 

oBankruptcy, Repossessions, and Judgments Report (FPSRP208)

oCharged Off Loans Posting Journal and Trial Balance (FPSRP220)

 

•Loans can be paid off (using the Payoff-Journal Offset transaction (tran code 2580-01) or remain open. You can retain the loan in an open status for as long as needed (until property sold, etc.). If you pay off a foreclosed or fully charged-off loan, you can stop the loan from being dropped when the system drops closed loans by entering Action Code 125 on the Loans > Account Information > Actions/Holds/Events screen.

 

•Changing the General Category or Loan Type codes may affect your General Ledger, credit reporting, and regulatory reporting.

 

•Your institution’s reports can be set up to exclude loans by general category or other codes, such as loan type. Separate reports can be set up to include the loans excluded on your regular reports. Contact your GOLDPoint Systems account manager for information regarding your current loan report setups. If changes to current reports or new reports are required, please submit a work order.

 

Note: Closed (paid off) loans are not generally included in reports.

 

•Report Writer, GOLDMiner Reports, or GOLDWriter can be set up to include or exclude these loans.

 

•Credit Reporting—Complete information for the proper reporting of these loans is available in Loans > Credit Reporting help.

 

•General Ledger—To reclassify troubled loans on the General Ledger, consider assigning a specific loan type (perhaps loan type = the general category code number). Also, think about what to do with reserves, interest, accrued interest, non-accrual status, etc. If necessary, Autopost setup can be adjusted for non-accrual loans.

 

•Expenses (Reserves): Insurance, taxes, etc. can be paid via the reserve system or by principal debits (tran code 500).

 

•Setting Non-Accrual Status: Setting the non-accrual status is done when payment or monetary activity is expected to continue with the customer. In these situations, your institution is usually required to lower the asset value of the loan in the General Ledger and not realize any income from the interest being paid by the customer. This status allows the customer’s loan to appear as a regular loan, but the money is handled differently in the General Ledger.

 

Teller transaction 583 is performed to set a loan to non-accrual. The Non-Accrual Book Balance field is located on the Loans > Account Information > Additional Loan Fields > Valuation/Billing tab. This is the book balance of the loan.

 

At the time the loan becomes non-accrual by tran code 583, the non-accrual balance becomes the same as the loan principal balance. As payments are posted to the loan, the Non-Accrual Book Balance is reduced by the full payment (principal and interest amounts). The General Ledger Autopost setup can be adjusted to point the interest portion of a payment (Loan Amount Field L5 or L12) to the Principal Balance G/L by using the Loan Accrual Status Posting Field #16.

 

The General Ledger File Balancing Report (FPSDR076) will use the Non-Accrual Book Balance to report the Loan File Balance portion of principal. Additionally, this same Posting Field #16 can be used with accrued interest amount fields, thus giving the institution control over how accrued interest posts or does not post to the G/L.

 

Loans can be included or excluded from the Accrued Interest Report (FPSRP019) by General Category. Further, accruals can be posted or not posted to the G/L according to institution option LLAG: Limit Loan Accruals for General Category greater than 79 (yes or no). The default is no. If yes, no accruals will post to the G/L for loans with a General Category greater than 79.

 

The loan Principal Balance on the Account Detail screen will continue to amortize as it normally would. If a partial charge-off transaction is processed, the Non-Accrual Book Balance decreases by the partial charge-off amount. The Non-Accrual field on the Loans > Account Information > Additional Loan Fields > Valuation/Billing tab will be checked if the loan is in non-accrual status.

 

The Clear Non-Accrual/Reclassify transaction (tran code 2584) will delete the checkmark in the Non-Accrual field, clear the amount in the Non-Accrual Book Balance field, and, in General Ledger, it will reclassify the balance between the Principal Balance and the Non-accrual Book Balance. The transaction will send the loan number to the G/L if the Journal Reference Number box on the transaction is left blank.

 

 

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