Tran Code 2741-01, Convert LOC to IB |
  
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Navigation: Teller System > Transactions > Loan Transactions > Loan Transaction Codes >
Tran Code 2741-01, Convert LOC to IB |
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Tran Code 2741-01 (Convert LOC to IB) is run automatically by the system when certain conditions exist on a line-of-credit account (payment method 5). When those conditions are met, in the afterhours the system will automatically convert the LOC loan to an interest-bearing loan (payment method 6). The conditions are as follows:
•The system will first look to see if Action Code 43 (End of Draw Period, Review Note) exists on the LOC account. If there is no code, then the other requirements will not be considered, and the account will not be converted to interest-bearing. Should the account have an Action Code 43, then the system will check for the following other requirements:
•If the LOC Principal Balance (LNPBAL) is greater than the Line Of Credit Limit (LNRLCL), then in the afterhours of that occurring the system will convert the LOC to an interest-bearing account. Or,
•In the afterhours of when Action Code 43 date is reached (draw period), the system will convert the LOC to an interest-bearing account.
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Note: Any institution can use this new feature. However, if your institution wants to use this new feature, your GOLDPoint Systems account manager must turn on Afterhours Update Function 100 (auto convert LOC to IB). You may also need to place an Action Code 43 and a date on those LOC accounts that you want to allow to be converted. If you want to add Action Code 43 yourself to accounts, you may need to first add it to the Action Code drop-down list. To add it to the Action Code drop-list, use the Loans > System Setup Screens > Client Code Setup > Loan Actions Codes. |
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Important:
•If the loan is paid in full before the expiration of the draw period, the LOC loan is not converted and the loan is closed.
•Card line-of-credit account (payment method 5 with LNCARD = Y) are excluded from this conversion process. Card LOC loans are maintained from the Loans > Cards and Promotions screen.
•The account needs to be fully drawn or past the draw period expiration (Action Code 43 date). Released accounts will not be converted.
During the conversion process, the following changes will occur on each qualifying account:
•The amounts in the Current Finance Charge (LNRLCC) and Prior Finance Charge (LNRLPC) fields will be moved to the Accrued Interest (LNACIN) field. If the loan is current and the customer made all required payments before the expiration of the draw period (Action Code 43 date), then finance charges will not need to be moved into the Accrued Interest field (as they were paid/collected). If the loan is delinquent, interest that has been billed but not yet collected will also be added to the Accrued Interest (LNACIN).
•If the Due Date is not in the future, the Due Date will be advanced to the next scheduled Due Date following the expiration of the draw period (Action Code 43 date) for the start of the amortized payment period.
•If the P/I Constant (LNPICN) is zero and the Original P/I Constant (LNOPIC) is not, the amount in the Original P/I Constant (LNOPIC) will be designated as the new P/I Constant after the loan has been converted. If the P/I Constant (LNPICN) and the Original P/I Constant (LNOPIC) are both zero, the system will calculate a new P/I Constant based on the remaining loan balance, the Interest Calculation Method (LNIBAS), and the Term of the Loan (LNTERM).
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Note: When these loans are originated, it’s very important that the Term of the Loan (LNTERM) and the Interest Calculation Method (LNIBAS) are populated as part of origination. |
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•All line-of-credit fields will be changed to their default values.
•The Coupon/Bill Code (LNBILL) will be changed to 21 (Consumer Bill and Receipt). Therefore, following the conversion, the loan statement will be generated using the Consumer Bill and Receipt (FPSRP380) instead of the LOC billing statement (whichever one your institution uses).
•The Payment Method (LNPMTH) field will be changed to 6 (Interest Bearing).
•The CIB account status will appear at the top of CIM GOLD screens to indicate the conversion. See example below.
Loans > History screen > Detailed History tab showing what the LOC to IB transaction looks like as well as the CIB status that is placed on the account.
Reversals
You can reverse the LOC-to-IB transaction using tran code 2741-03.