If this box is checked, the Dealer Prepaid Interest/Premium and the Dealer Interest/Premium Earned fields below will no longer be file maintainable. However, the Dealer Interest/Premium Earned field will change if a Dealer Interest Increase (tran code 210/01) or a Dealer Interest Decrease (tran code 200/01) transaction is run. The default is unchecked (a blank checkbox).

Amortize Dealer Premiums Option
An update function (#81) is available to amortize dealer premiums or interest automatically. By checking the Amortize Dealer Interest field and specifying an Amortization Code (see below), the system will automatically amortize the dealer premiums each month. Transaction code 350 is used to do the work for you. The update function looks for the same condition on the loan as the other amortization functions, so an amortization will not happen if any of the following conditions exists on the loan:

1.If this is a non-performing loan.

2.If General Category is "80" or greater on the Loans > Account Information > Account Detail screen.

3.If the Asset Classification field is "Doubtful" or "Loss" on the Loans > Account Information > Additional Loan Fields screen.

4.Action code 39 stops fees and premiums from amortizing. On or after the action date, the fees/premiums will amortize. This action code would generally be used if you have loans that have not been sold, but you are planning to sell.

5.In addition, Institution Option DFAM forces a delinquent loan to amortize to the due date, as long as the due date is less than the current month and year and not less than the date last amortized (LNDLAD).

If you want this update function set up for your institution, please submit a work order.

Two methods of amortization are available:

1 - Straight Line (code 1): The straight line method (code 1) is the default. It is most often used for loans with no scheduled payment terms (demand loans) and revolving lines of credit. It is calculated as follows:

(Dealer Prepaid Interest/Premium % Term of the Loan) X the number of months from the date the item was last amortized to the present date. Normally this is one month.

2 - Rule of 78s (code 2): The rule of 78s method (code 2) calculates the amount by taking the difference between the Date Opened to the date the item was last amortized, and the amount figured from the Date Opened to the current date. If the loan has an action code 78 and date (as set up on the Loans > Account Information > Actions, Holds and Event Letters screen), it calculates by taking the difference between the date last amortized and the action code date.

The formula for each of these amounts is displayed below. "RINO" is the remaining installments in months (Date Opened to the Date Last Amortized, unless the loan has action code 78, in which case it is the difference between the Date Last Amortized and the Action Code Date for action code 78). "OINO" is the original installments (Date Opened to the current date).

[RINO X (RINO + 1)] ÷ [OINO X (OINO + 1)] X Dealer Prepaid Interest/Premium (see below)

Example 1:

A dealer opened a loan account in July 2010 with Dealer Prepaid Interest/Premium of of $100. It was last amortized on June 2011. Today's date is July 1, 2011. This amortization method would be calculated as follows:

[11 X (11 + 1)] % [12 X (12 + 1)] X $100 = $84.62

Example 2:

A dealer opened a loan account in July 2010, but wasn't set to start deferring the Dealer Prepaid Interest/Premium until October 2010 (action code 78 date). The date the loan was last amortized was June 2011, and today's date is July 1, 2011. This amortization method would be calculated as follows:

The difference between action code 78 date and the last amortization date is 9 months (RINO).

[9 X (9 + 1)] % [12 X (12 + 1)] X $100 = $57.69

This field can be file maintained only if the Amortize Dealer Interest field above is checked. Once the field is checked, you can only change this field by running the following teller transactions in GOLDTeller:

•A Dealer Interest Increase (tran code 210/01) will add an amount to this field.

•A Dealer Interest Decrease (tran code 200/01) will reduce the amount in this field.

Refer to the Dealer Interest/Premium Earned field below for more details.

This field is updated in three ways:

1.A Dealer Interest Increase (tran code 210/01) or a Dealer Interest Decrease (tran code 200/01) transaction is processed.

2.If the Amortize Dealer Interest field above is unchecked and the Guaranteed Rt field (on the Loans > Payoff screen) is nonzero, the program will add to this field the amount of investor interest that was collected.

3.If the Amortize Dealer Interest field is checked, Dealer Interest/Premium Earned can only be changed at monthend when the dealer interest is amortized.

REPORTS:

The Dealer Premium Amortization Report and the Dealer Premium Trial Balance (both FPSRP192) are available. The Amortization Report should be run at monthend and provides you with the premium amount earned this month, among other things. The Trial Balance can be run daily, weekly, or monthly. See the Loan Reports manual in DocsOnWeb for more information about running this report. If you want either of these reports, please submit a work order. This request can also be included in your request for the update function or institution options mentioned above.