Loans > Loan Screens > Account Information Screen Group > Account Detail Screen

The Loans > Account Information > Account Detail screen, Pre-payment Penalty tab provides your institutions with the ability to create a prepayment penalty for a specific loan rather than using the institution options (Loans > System Setup Screens > Prepayment Penalty Option).

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Loans > Account Information > Account Detail Screen, Pre-Payment Penalty Tab

Up to 10 different penalty calculations can be created for an individual loan. At the time a payoff quote is created (Loans > Payoff screen), the system would then use the penalty calculations for this loan (penalty code 30) on the Pre-Payment Penalty tab.

There are four types of penalty codes that can be used:

1.	System pre-defined penalty codes (codes 1-29)

2.	Loan level institution-defined penalty code (code 30) (this tab)

3.	Institution option penalty codes (codes 31-60) (set up on the Prepayment Penalty Option screen)

4.	Special calculations that the system cannot perform, but which alert the institution that a prepayment penalty must be manually calculated (codes 80-120).

All file maintenance to this tab is stored in history. This allows you to determine by whom and when changes were made to the screen.

The fields on this tab are as follows:

Field

Description

Original Balance

Mnemonic: LNOBAL

This is the original balance of the loan, as set up during loan origination.

Principal Balance

Mnemonic: LNPBAL

This field displays the current principal balance of the loan.

Opened

Mnemonic: LNOPND

This field displays the date the loan was opened or funded.

Maturity

Mnemonic: LNMATD

This field displays the date the last payment is due and the loan should be paid off.

Term

Mnemonic: LNTERM

This field displays the term of the loan in months, as set up during loan origination.

Balloon

Mnemonic: WKBALD

This field displays the final payment or final balloon payment. A balloon payment means the loan has had equal or similar payments for a designated time, then one final lump-sum "balloon" or large payment to payoff the loan. Whether the final payment be a balloon payment or regular final payment, that amount will be displayed in this field.

Whether the final payment is a balloon payment or single payment is determined by the Maturity Modifier field (found on the Loans > Account Information > Additional Loan Fields screen).

Due

Mnemonic: LNDUDT

This field displays the date the next regular payment is due.

Prepayment Penalty Code

Mnemonic: LNPPEN

Click the list icon and select the prepayment penalty code you are setting up in this field. See below for more information.

Prepayment penalty codes 31-60 are available to view and be defined by your institution on the Loans > System Setup Screens > Prepayment Penalty Option screen.

If you select prepayment penalty 16, the Original Add On Amount field (see Use With Penalty Code 16 Only below) in the Use With Penalty Code 16 Only field group becomes file maintainable.

If you select prepayment penalty 27, the fields in the Use With Penalty Code 27 Only field group below will become file maintainable.

If you select prepayment penalty 30, the fields in the Use With Penalty Code 30 Only field group below will become file maintainable.

Possible codes in this field are as follows:

CODE	DESCRIPTION OF PREPAYMENT PENALTY CODE

1	Six months interest (loan balance x loan rate ÷ 2).

2	Ninety days interest (current loan balance - 20% of original loan balance x interest rate ÷ 4).

3	Six months interest on adjusted balance (loan balance - 20% of original loan amount x loan interest rate ÷ 2).

4	No prepayment penalty.

5	Remaining principal balance minus 20% of original loan amount x 1% for first 5 years of the loan. (Uses the Date Opened and Original Balance on the Loans \| Account Information screen.)

= 1.5%

= 2.0%

= 2.5%

= 3.0%

10	120 days interest on (current loan balance - 20% of original loan balance x interest rate ÷ 3).

11	Charge $300.00 if a loan pays off within 24 months of Date Opened field.

12	Charge $500.00 if a loan pays off within 24 months of Date Opened field.

13	Charge of 1% principal balance if a loan pays off within 12 months of Date Opened.

14	Charge $350 if a loan pays off within 60 months of the Date Opened field.

15	Charge $500 if (same as 14).

16	If the loan pays off within 24 months of the Date Opened field, the penalty is $500.

17	2% of original balance if it is in the first three years.

18	1% of current balance if it is in the first three years.

19	2% of current balance if it is in the first two years.

20	2% of current balance if it is in the first five years.

21	1.5% of current balance if it is in the first year.

22	2% of current balance if it is in the first nine months.

23	1.5% of original balance if it is in the first three years.

24	2% of original balance if it is in the first five years.

25	2% of original balance if it is before the maturity date.

26	1% of current balance if it is in the first two years.

27	This is a flat fee.

28	3% of current principal balance.

29	2% of current balance if it is in the first three years.

30	User-defined calculations.

A minimum interest charge will be collected if the interest collected in the past two years is less than the lesser of $75.00 or 10% of the original balance. The Minimum Interest field will display the lesser of $75.00 or 10% of the original balance minus the interest collected in the past two years (POACIN + LNPVTD + LNYTDI). The description on the Payoff screen and on the payoff quote will say “Minimum Interest” rather than pre-payment penalty.

62	A minimum interest charge will be collected if in the past two years the interest collected is less than:

• $25.00 if the original balance is less than or equal to $1,000.00

• $50.00 if the original balance is greater than $1,000.00 and less than or equal to $2,000.00

• $75.00 if the original balance is greater than $2,000.00

63	2% of principal balance minus insurance refund minus interest refund (rule of 78s) if paid in full within first 36 months of term.

64	2% of principal balance minus insurance refund minus interest refund (rule of 78s) if paid in full within first 60 months of term.

65	3%, 2%, or 1% of balance minus mandatory refunds if paid in full within first 12, 24, or 36 months of term (rule of 78s), respectively. Mandatory refunds are any that would show on the payoff quote; i.e., insurance, interest, finance charge, amortization fees, etc.

Use this code if your institution does not charge prepayment penalties but instead charges a release fee at payoff time (when the origination is secured by a mortgage or deed of trust). This code changes the description of relevant CIM GOLD fields (and history) to reflect that the specified charge is a Release Fee and not a Prepayment Penalty fee.

80-120

User-defined (no automatic calculations performed). Use codes 80 - 120 for any purpose your institution wants.

* Codes 6, 7, 8, and 9 are the same as Code 5 except the percent changes.

If a loan account has a Prepayment Code of 80-120, the message “PREPAYMENT PENALTY MAY APPLY” will appear at the bottom of the screen. If Institution Option CPRP is set and the Renewal/Pro-rate field is marked, all prepayment penalties will be cleared from the payoff.

Reporting Penalties as 1098 Interest

If you want this penalty to be reported as 1098 interest at year-end, enter “pre-payment penalty int” in the Description field. If you do not want the penalty amount to be reported, enter “prepayment penalty fee” (or a similar description).

Action Code 36

If action code 36 (Stop Date for Prepayment Penalty) and afterhours update function 88 are set up for a loan, the prepayment penalty code will automatically be removed on the night of the action date.

Use With Penalty Code 16 Only

Mnemonic: LNOADD

If you select penalty code 16 in the Prepayment Penalty Code field above, the Original Add On Amount field in this field group becomes file maintainable. If the loan pays off within 24 months of the Date Opened field, the penalty is the lesser of $500 or the amount entered in this field.

This is the same amount entered on the Original Add-On amount field on the Loans > Account Information > Additional Loan Fields screen. If an amount is entered in that field on that screen, it will also appear in this field. If you change information in this field, it will also be changed on the Additional Loan Fields screen.

Use With Penalty Code 27.66 Only

Mnemonic: LNCFEE

Use the Commitment/Release/Prepayment Penalty field in this field group to indicate the amount paid by an account holder to process the loan when he/she applied for the loan.

Prepayment penalty can be used to store the prepayment penalty, used in conjunction with prepayment penalty code 27. (It would be the amount added to the payoff.)

Use With Penalty Code 30 Only

Mnemonic: LNPPIN, MOPDYS

See Use Interest Penalty details for more information about the Use Interest Penalty field in this field group. See below for more information about the Penalty Days field in this field group:

This field is used in the calculation of prepayment penalty code 30 (see the Use Interest Penalty field for how penalty code 30 is calculated). This field should reflect the amount of interest your institution wants to use in the calculation of the amount to charge the customer in the event that the customer pays off the loan within a designated amount of months (see Stop Date field) from when the loan was opened.

For example, if you have prepayment penalty 30 set on a loan, and the prepayment penalty is charged on the loan if it is paid off before five years, the Penalty Days field is used for one part of the calculation to determine how much to charge as a prepayment penalty fee.

Example:

•To charge two months of interest based on the calculation explained in the Use Interest Penalty field, you would enter "60" in this field.

•To charge three months of interest based on the calculation explained in the Use Interest Penalty field, you would enter "90" in this field.

•To charge four months of interest based on the calculation explained in the Use Interest Penalty field, you would enter "120" in this field.

	Note: The Use Interest Penalty field must be marked for this field to be file maintainable. Additionally, the Percent or Dollar field in the Set Up Prepayment Penalty Code 30 field group must be set to "Percent."

You can set up varying levels of fees for the prepayment penalty by using the Set Up Pre-payment Penalty Code 30 field group.

Pre-Payment Penalty Code 30 field group

See Pre-Payment Penalty Code 30 field group for more information.