Loans > Loan Screens > Account Information Screen Group > Account Detail Screen > Special Delinquency Calculations for Consumer Loans

An institution option, UDQG (Use Delinquency Grading), is available that uses a special calculation when determining the delinquency of a loan. The loan must be a precomputed loan or a daily simple-interest bearing loan (payment methods 3 or 6), and it cannot have a Loan Frequency of 26 (bi-weekly).

The term "grading an account" or "grading" is used to describe the process used by the system to calculate a graded due date to determine the delinquency of the loan based on a set of rules. This graded due date is used to calculate delinquency and determine when to assess late charges.

If UDQG is set, the program goes through the following steps to determine the graded due date (if the account meets the qualifications):

1.Add Lifetime Late Charges Collected plus Applied to Payment.

2.Compare the above amount to the current payment amount (PI Constant or Next PI Constant). If you collect reserves, the Next Payment Due will be used, which would include the amount of any reserves if reserves are part of the Payment Application field, in place of the PI Constant.

3.If the Lifetime Late Charges Collected plus Applied to Payment is greater than or equal to the PI Constant (or Next Payment Due), then the system calculates the graded due date by taking the Due Date (LNDUDT) and advancing as many frequencies as possible based on the combination of the amount in these two fields. For example, if PI Constant is $100, Applied to Payment is $90, and Lifetime Late Charges is $10, Applied to Payment and Lifetime Late Charges adds up to $100, which is the amount of PI Constant, so the system would calculate the graded due date for delinquency calculation purposes.

4.The system uses the graded due date to calculate the Delinquency Category.

The Delinquency Category is an important part of the loan process and is used in Collections Queues (see the Queues > Collection Queues help for more information), the Daily Statistics Delinquency Report (FPSRP211), the calculated delinquency work field in GOLDWriter (LNWDCAT), and the Daily Delinquency Report (FPSRP221).

Additionally, special delinquency affects how the account is reported to credit bureaus during credit reporting. For example, a loan that would normally be reported as 60-days late but due to special delinquency, qualifies as being only 30-days late. During the credit reporting process, the loan would be reported as being only 30-days late in the Payment Profile field.

	Note: At no time during this process is the Due Date field (LNDUDT) actually advanced. This is only a calculated date used for purposes of delinquency grading.

Example of How the System Determines the Delinquency Category at Monthend using Special Delinquency Calculations

August monthend

Payment amount (PI Constant) is $200.00

Applied to Payment is $50.00

Lifetime Late Charges Collected is $250.00

Due Date + Grace Days is 6-15-18

Lifetime Late Charges Collected + Applied to Payment = $300.00

Since the Lifetime Late Charges Collected plus Applied to Payment are greater than the PI Constant, the system uses a graded due date, which in this example would be advanced one frequency to 7-15-18. At July monthend, the account had a Delinquency Category of 0 because it was not 30 days late yet. At August monthend, if another payment isn't made, the account is considered 30-days late even though the Due Date is 6-15-18.

Special Late Charge Assessing for Consumer Loans

Late charges are assessed on a loan when a borrower is late making a full payment. If your institution allows Grace Days, late charges will not be assessed until the afterhours after the last Grace Day.

However, if your institution uses institution option DOPT DLQC (Use Delinquency Grading for Late Charges), the system uses special calculations to determine whether a late charge should apply.

	Note: Institution option UDQG must also be set, the loan must be interest-bearing (payment method 6) or precomputed (payment method 3), and the Payment Frequency cannot be 26 (bi-weekly payment).

The fields used by this process are as follows:

Interim Late Charges

This field only displays information if Institution Option DOPT DLQG is enabled. This field stores an accumulated amount of late charges collected over a period of time. If your institution includes late charges in payments (the Payment Application code includes "Late Charges"), this field will be updated by the amount of the payment that goes toward late charges.

This field only updates with a payment if the selected loan's Payment Frequency is 13 (Floating Payment) or less and the Payment Application includes "Late Charges." The Pay Late Charge transaction (tran code 550) will also update this field. This field is cleared whenever any of the following occurs:

•An Interest-Only transaction (tran code 2600-03) is run.

•A Judgment transaction (tran code 2510-02) is run.

•A CP2 (Exception) transaction (tran code 2600-00) is run.

•The Interim Late Charges field (MRCLCC) will be cleared when the account is brought current (any time the Due Date (LNDUDT) is advanced beyond the transaction date (LNTRAN)) only if late charges are being collected with the payment. (Example: LNDUDT = 01/02/2018 and LNTRAN is 12/15/2017. The Interim Late Charges will be cleared.)

This field is used in conjunction with the Applied to Payment field (LNPRTL) during the grading process (see Late Charge Grading below).

Interim Paid Amount

This field appears in Loans > History when its value changes. See below for more information:

This field is cleared whenever any of the following occurs:

•An Interest Only transaction (tran code 2600-03) is run.

•A Judgment transaction (tran code 2510-02) is run.

•A CP2 (Exception) transaction (tran code 2600-00) is run.

•An Assess Late Charges transaction (tran code 560) is run.

This field is used to keep track of the amount paid toward the current payment due. Once late charges have been assessed for the current payment or a payment is made that advances the Due Date beyond the transaction date (LNTRAN), this field is cleared. Otherwise, this field will continue to accumulate all payments made toward the current payment due only if late charges are collected during payment (Payment Application includes "Late Charges") or Late Fee Restrictions? is selected.

There are four possible scenarios that can occur when a payment is made. These scenarios will occur only if late charges are collected during payment or if Late Fee Restrictions? is marked.

1.A full payment is made and the Due Date advances.

•Because the account is now paid into the future, this field is cleared. The formula is: Due Date minus one Frequency plus Grace Days. If the result is in the future, the field is cleared.

Example: The P/I Constant due on a loan is $100.00. The account owner makes a $100.00 payment on 08-19-18, five days past the Due Date of 08-14-18 (but before the Grace Days end). If there are no late charges or fees due, the $100 payment is enough to satisfy a full payment and the Due Date advances to 9-14-18. (9-14-18 – 1 (frequency) = 8-14-18. 8-14-18 + 10 grace days = 8-24-18. Is 8-24-18 greater than or equal to the transaction date? If yes, this field is cleared. If no, in the afterhours that night, the system assesses late charges to the account.)

2.A full payment is made and the Due Date does not advance. This can happen when there are outstanding late charges or fees to be collected and the Payment Application code starts with a 4 (late charges) or a 7 (fees).

•A full payment was made so the account is now eligible for grading to determine whether a late charge should be assessed as well as the delinquency status of the account (see Late Charge Grading on the Special Late Charge Assessment and Grading topic).

•If grading determines that a late charge is not assessed, this field will be cleared the night late charges would have normally been assessed. A history item is written showing a late charge assessment of zero and this field being cleared.

•This field displays the amount of the full payment and will be cleared on the night late charges are assessed. The same calculation in #1 above is used to determine when to clear this field. (In this case, the answer to the question in the example is "no").

3.A short payment is made.

•This field displays the amount of money that was paid (in this case an amount less than the P/I Constant amount). In the afterhours of the Due Date, the system assesses late charges to the account because a full payment was not made.

4.Several short payments are made before late charges are assessed.

•If the total amount paid is equal to or greater than a full payment and the Due Date advances, then this scenario is the same as scenario 1.

•If the total amount paid is equal to a full payment but the Due Date does not advance, this scenario is the same as #2.

•If the payment amount is less than the P/I Constant, see scenario #3.

Interim Paid Amount for Late Code 30

If the selected Late Code is "30 - Percentage of Current Payment," this field displays the accumulation of all amounts paid during the late charge grace period less Fees Paid (tran code 850) and Principal Decrease (tran code 510-47). The amount in this field will be increased if the transaction date for a payment falls before or within the grace period. The late charge grace period is the period from the Due Date to the Due Date plus Grace Days.

Example: If a loan had a Due Date of 06-01-18 and Grace Days of 10, the Interim Paid Amount field will increase for each payment received from 06-01-18 through 06-11-18.

The Interim Paid Amount field is cleared whenever any of the following occurs:

•An Interest Only transaction (tran code 2600-03) is run.

•A Judgment transaction (tran code 2510-02) is run.

•A CP2 (Exception) transaction (tran code 2600-00) is run.

•An Assess Late Charges transaction (tran code 560) is run.

•During the payment transaction, if the payment is enough to advance the Due Date to a date in the future, the Interim Paid Amount field is cleared.

Late Charge Grading

The term "grading an account" or "grading" is used to describe the process used by the system to calculate a graded due date to determine whether a late charge should be assessed on the account based on a set of rules. For late charge assessing, grading works as follows:

•If a full payment is made for the current payment due but the Due Date does not advance, the account is eligible for grading. Example: An account's Next Payment Amount is for $100.00 with a Due Date of 08-14-2018. There are $10.00 in outstanding late charges. The borrower makes a $100.00 payment but, because late charges are collected first (the Payment Application code starts with a 4 (late charges)), the Due Date does not advance. On the night late charges are assessed, the program will give the customer credit for having brought in a full payment by grading the account.

•The program first determines the amount in the Applied to Payment field (in the example above, this would be $90.00; 100.00 minus the late charges), then checks the amount in the Interim Late Charges field ($10.00 of late charges collected). If there is enough in these two fields to equal a full payment or more, the program will calculate a graded due date (09-14-2017). The system will then reevaluate whether late charges can be assessed (no, in this example, since the "new due date" is in the future).

However, this same scenario works much differently if $10.00 in outstanding fees should be collected instead of late charges (Payment Application code starts with a 7 (loan fees)). Because no late charges were collected with the $100 payment, Interim Late Charges is blank. The amount owing for a full payment is still $100, but because the system pays fees first, $10 is collected for fees, leaving $90 for the payment, which is $10 less than the full amount. Since there is not enough money to calculate a graded due date, the account will get a late charge.

•Only a full payment amount (PI Constant) makes an account eligible for late charge grading.

	Note: At no time during this process is the Due Date actually advanced and reflected in the Due Date field (LNDUDT).

Summary

The process of calculating a graded due date when assessing late charges is as follows:

1.Institution Option DOPT DLQG must be enabled.

2.The current Due Date must be the due date that corresponds to the current late charge assessment.

3.One full payment or more must have been paid toward the current payment due (there must be a full PI Constant amount in Interim Paid Amount).

4.Compare the Interim Paid Amount to the PI Constant or Next PI Constant.

5.If the Interim Paid Amount is greater than or equal to the PI Constant, the account is eligible for grading.

6.The graded due date is calculated if the Interim Late Charges amount plus the Applied to Payment amount is greater than or equal to the PI Constant. The graded due date is advanced as many times as there are full payments.

7.Compare the graded due date to the loan Due Date.

8.If the graded due date is greater than the loan Due Date, a history item is written showing a late charge assessment of zero.

Loan Example

Payment amount = 100.00

Late Charge Code = 25

Grace Days = 10

LOL = Lifetime Late Charges

ILC = Interim Late Charges

IPA = Interim Paid Amount.

LOL, ILC, IPA, Applied To Payment, Lt Charges Due, and Fees Due amounts are after the transaction was run.

Tran Date	Tran Amount	Tran Description	LOL	ILC	IPA	Applied To Payment	Lt Charges Due	Fees Due	Due Date After Tran
07-14-17	90.00	Payment	0	0	90.00	90.00	0	0	07-14-17
07-24-17	1.00	Late Charge	0	0	0	90.00	1.00	0	07-14-17
07-25-17	25.00	Payment	1.00	0	25.00	14.00	0	0	08-14-17
08-25-17	8.60	Late Charge	1.00	0	0	14.00	8.60	0	08-14-17
09-01-17	100.00	Payment	9.60	0	100.00	5.40	0	0	09-14-17
09-02-17	20.00	Assess Fee	9.60	0	100.00	5.40	0	20.00	09-14-17
09-03-17	100.00	Payment	9.60	0	200.00	85.40	0	0	09-14-17
09-24-17	1.46	Late Charge	9.60	0	0	85.40	1.46	0	09-14-17
10-03-17	100.00	Payment	11.06	0	100.00	83.94	0	0	10-14-17
10-14-17	300.00	Payment	11.06	0	0	83.94	0	0	01-14-18
10-24-17	0	Late Charge	11.06	0	0	83.94	0	0	01-14-18
01-24-18	1.65	Late Charge	11.06	0	0	83.94	1.65	0	01-14-18
02-02-18	58.00	Payment	12.71	0	58.00	40.29	0	0	02-14-18
02-10-18	35.00	Payment	12.71	0	93.00	75.29	0	0	02-14-18
02-24-18	2.51	Late Charge	12.71	0	0	75.29	2.51	0	02-14-18
03-24-18	10.00	Late Charge	12.71	0	0	75.29	12.51	0	02-14-18
04-05-18	100.00	Payment	15.22	12.51	100.00	62.78	0	0	03-14-18
04-24-18	10.00	Late Charge	15.22	12.51	0	62.78	10.00	0	03-14-18