Teller System > Transactions > Loan Transactions > Loan Transaction Codes

Automatic charge-offs are performed automatically by the system against accounts that are severely delinquent. The transaction performs a loan charge off for the full amount of the principal balance left on the loan. It does not close the loan; whereas the Full Write-off transaction (tran code 2510-05) does close the loan. (Also see the Charge-off transaction 2022-01 for information on manually run charge-offs).

Note: This transaction follows the same rules set up in the charge-off institution options (COOP). See the COOP Options section in the Charge-off transaction help. However, only COOP options 0 and 6 work for automatic charge-offs (see Note below for one exception).

Note:

COOP 10 as used by institution 338 also does automatic charge-offs, but only for institution 338.

Additional requirements are needed before loans can be automatically charged off. This process functions as follows:

1.	The loan must be a precomputed (payment method 3), line-of-credit (payment method 5), interest-bearing (payment method 6), or signature loan (payment method 16). (Line-of-credit loans with a zero balance will be skipped.)

Institution option CODY stores the number of days past the loan due date that the charge off will automatically occur. The system will charge off the loan in the afterhours when the number of days delinquent is greater than the number of days in institution option CODY. Additionally, if your institution has signature loans and the Auto Charge Off Payment Frequency field on the Signature Loan Details screen is greater than 0, the system uses that field to determine when to automatically charge-off the loan.

3.	Action code 77 will stop the charge off from processing. (No date is needed.)

No charge off will occur on loans with Hold Codes 4, 5, 7, and 9, except for institution 338. Charge-offs still occur on those accounts with those hold codes (bankruptcies) for institution 338. As of the July 2020 core services release, all COOP options will now work for automatic charge-offs. Previously, only coops 0 and 6 would work.

5.	The afterhours process uses the Automatic Charge-off transaction as a tran code 022-01.

6.	The afterhours process uses the General Ledger numbers set up in the Write-Off - Regular Loan field on the GOLD Services > General Ledger > GL Account By Loan Type screen.

7.	TORC 63 (afterhours charge-off) is used with this transaction.

8.	Institution option STRN (Allow Special Transactions with SOV Set) must also be set to use this function. No error will be given if it is not.

Also, loans will not be automatically charged off if they have a sold balance (securitized or investor loans). The account will appear on the Afterhours Processing Exceptions Listing (FPSRP013) with the message "PORTION SOLD MUST BE ZERO." Note: An institution option (OP21 ACOS) is available that, when set, allows this transaction to be run on an investor sold or securitized loan (Portion Sold field (LNISLD) is greater than zero).

You can request this transaction via a work order. Prior to using this transaction, please contact the GOLDPoint Systems financial team as your Autopost may need to be adjusted for TORC 63. Additionally, your account manager must set Afterhours Update Function 86 (Automatically Charge-off Loans") to "DAILY" for your institution.

Refer to the Charged Off Loans Posting Journal and Trial Balance report (FPSRP220) and the Accounting Department for the General Ledger Transaction Listing online report (see section 6.3 in the General Ledger manual).

Also, request the Charged Off Loans Posting Journal and Trial Balance report (FPSRP220) be set up.

Use the other Charge-off transaction, tran code 2022-01, if you want to manually charge off an account.

Results of this Transaction

The results of this transaction varies according to the COOP option your institution uses.

This transaction does not close the loan. The principal balance does not change.

Important Options for Precomputed Accounts

Precomputed loans (payment method 3) must be converted to a daily simple interest (payment method 6) prior to processing this transaction. This is done on the Loans > Transactions > Charge Off Transactions screen > Convert Precomputed to Simple tab.

An institution option, IBCO, will automatically convert precomputed loans to simple-interest loans before charging them off. See COOP options 0 and 6 for more information about this option. Institution option CODY and either 0 or 6 COOP must also be set up in order to use this option. However, if the precomputed account has a force-placed insurance policy, the loan will not convert from precomputed to interest-bearing automatically during the afterhours process. Instead, the account will show on the Afterhours Exception List (FPSRP013). You must manually handle force-placed insurance, the reason being is that the way force-placed insurance policies are cancelled affects the loan differently. For example, a “flat cancel” cancels the insurance policy as though it never existed. “Insured request” cancellation will allow the number of months of premiums from the time the insurance policy was opened until the time it was cancelled and rebate the remaining amount of insurance premiums to the account.

Insurance policies that were on the account when originated and tracking insurance policies will remain on the loan after it has been converted to a precomputed account.

See COOP options 0 and 6 for more information about this option. Institution option CODY and either 0 or 6 COOP must also be set up in order to use this option (as well as COOP 10 for institution 338).

Correction: See Automatic Charge-Off Reversal Transaction.