Waiver of fees post payment of fees

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Waiver of fees post payment of fees

Overview

A waiver of fees after fee payment refers to a scenario in which we try to waive a fee which has already been paid by the borrower. When a fee waiver is granted after fees have been paid, there are two ways we can adjust the fee, either we can return the full amount which was paid (kept in Excess) through refund transaction or adjust that amount to the principal component of the loan. The loan's principal amount is reduced from the date of the waiver. The interest amount is also adjusted accordingly to reflect the reduced principal amount. This means that the borrower is not required to pay interest on the portion of the adjusted principal.

The ability to waive a paid fee and adjust the principal and interest amounts accordingly provides more flexibility and support for borrowers.

Note:

  • This feature only supports the full waiver of the paid fees. By selecting Paid Charge Waiver, the entire fees are waived.

Waive the paid fees

Prerequisite

  • Interest Posting Frequency = Monthly

  • Enable Adjustment Entry = True

Steps

  1. Log in to your Salesforce account.

  2. Click CL Contracts and create a new contract.

  3. Go to Loan Quick Menu.

  4. Click Loan Actions.

  5. Click Waiver Actions.

  6. Click Waiver Type and select Paid Charge Waiver.

    The paid charge will be waived off.

Example

Scenario 1

  • Is Capitalization enabled = True

  • Enable Adjustment Entry = True

  1. Let us create a simple loan with the following details and disburse it:

    • Loan Amount = $10,000

    • Term = 10

    • Interest Rate = 5%

    • Contract Date = May 25, 2013

    • Payment Start Date = June 25, 2013

    • Payment Frequency = Monthly

    • Adjustment Type = Principal

  2. Let us create a Periodic fee with the following details:

    • Fee Calculation method = Fixed

    • Amount = $400

    • Periodic Fee Amount Type = Per Period Amount

    • Include in Dues/ Schedules = True

    • Enable Fee Capitalization = True

  3. Let us go to June 25, 2013.

    The system creates a charge, and it will be capitalized.

  4. Let us go to June 30, 2013, and create an LPT of $400 with transaction date as June 30, 2013.

  5. Now let us go to July 10,2013, and waive the paid charge.

    The values must be updated as follows:

    • LPT must be created with Transaction amount = 400 and Transaction Date = 6/30/2013, Payment Type = Paid Charge Waived

    • OLT must be created with Transaction Type = Paid Charge Waiver

    • Principal must be reduced by $400 that is (10000 - 400 = 9600)

    • Interest Remaining = (10441.67*5*5/36000) = $7.25

    • Interest Accrued = (9641.67*5*10/36000) = $13.39

    • Last Accrual Date = June 30,2013

    • Charge must be marked paid and waived.

Scenario 2

  • Is Capitalization enabled = True

  • Enable Adjustment Entry = False

  1. Let us create a simple loan with the following details and disburse it:

    • Loan Amount = $10,000

    • Term = 10

    • Interest Rate = 5%

    • Contract date = May 25, 2013

    • Payment Start Date = June 25, 2013

    • Payment frequency = Monthly

  2. Let us create a Periodic fee with the following details:

    • Fee Calculation method = Fixed

    • Amount = $400

    • Periodic Fee Amount Type = Per Period Amount

    • Include in Dues/ Schedules = True

    • Enable Fee Capitalization = True

  3. Let us go to June 25, 2013.

    The system creates a charge, and it will be capitalized.

  4. Let us go to June 30, 2013, and create an LPT of $400 with transaction date as June 30, 2013.

  5. Now let us go to July 10,2013, and waive the paid charge.

    The system must display the following message " You can waive a paid charge only if the Enable Adjustment Entry flag is set to true."

Scenario 3

  • Is Capitalization enabled = False

  • Enable Adjustment Entry = True

  1. Let us create a simple loan with the following details and disburse it:

    • Loan Amount = $10,000

    • Term = 10

    • Interest Rate = 5%

    • Contract Date = May 25, 2013

    • Payment Start Date = June 25, 2013

    • Payment Frequency = Monthly

    • Adjustment Type = Principal

  2. Let us create a Periodic fee with the following details:

    • Fee Calculation method = Fixed

    • Amount = $400

    • Periodic Fee Amount Type = Per Period Amount

    • Include in Dues/ Schedules = True

    • Enable Fee Capitalization = False

  3. Let us go to June 25, 2013.

    The system creates a charge.

  4. Let us go to June 30, 2013, and create an LPT of $40 with transaction date as June 30, 2013.

  5. Now let us go to July 10,2013, and waive the paid charge.

    The values must be updated as follows:

    • LPT must be created with Transaction amount = $40 and Transaction Date = 6/30/2013, Payment Type = Paid Charge Waived

    • OLT must be created with Transaction Type = Paid Charge Waiver

    • Principal must be reduced by $40 that is (10000 - 40 = 9960)

    • Interest Remaining = $13.89

    • Interest Accrued = $27.67

    • Periodic charge must be marked as waived.

Scenario 4

  • Adjustment Type = Excess

  1. Let us create a simple loan with the following details and disburse it:

    • Loan Amount = $10,000

    • Term = 10

    • Interest Rate = 5%

    • Contract Date = May 25, 2013

    • Payment Start Date = June 25, 2013

    • Payment Frequency = Monthly

  2. Let us create a Periodic fee with the following details:

    • Fee Calculation method = Fixed

    • Amount = $400

    • Periodic Fee Amount Type = Per Period Amount

    • Include in Dues/ Schedules = True

    • Enable Fee Capitalization = True

  3. Let us go to June 25, 2013.

    The system creates a charge, and it will be capitalized.

  4. Let us go to June 30, 2013, and create an LPT of $400 with transaction date as June 30, 2013.

    • This payment goes to the Excess amount.

    • This amount can be refunded by the refund transaction.

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