Manual Closure of a Loan

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Manual Closure of a Loan

Overview

A loan closes when no dues are left to be paid, or when you do a complete payoff. For an FIT loan, the loan closes when all the remaining dues are paid, and no further draw downs are made on the loan. 

With the Oxygen release, however, you have the flexibility to decide whether you can close the loan manually or allow the system to close it automatically once the outstanding amount has been paid off. This flexibility is achieved with the help of the Manual Loan Closure flag.

If the Manual Loan Closure flag is enabled on a loan, the loan can only be closed manually and does not close on its own when the relevant conditions are satisfied. A loan can be manually closed if either the payoff amount is zero or the loan is in the Active - Marked for Closure status.

Key Concepts

  • Manual closure of a loan can be performed by enabling the Manual Closure flag in the Additional Parameters. The default state of this flag is disabled. 

  • If the Manual Closure flag is enabled on a FIT-enabled loan, the loan does not close automatically once it crosses the Draw Period End Date even if all the remaining dues such as the principal, interest, fees, and additional interest are paid.

  • On closing the loan manually, the following actions take place in the system:

    • An OLT of the type Manual Loan Closure is created.

    • The value of the Last Transaction Type in the contract is changed to Manual Loan Closure.

    • The loan status changes to Closed-Obligations Met.

    • A Loan Transaction Summary (LTS) is created for the OLT of the type Manual Loan Closure.

    • An additional LPT gets created with the transaction amount marked as cleared if the following actions are performed before the manual closure:

      • A payoff tolerance amount is defined.

      • An excess amount is paid with the payoff.

      • A rebate is provided on the payoff.

    • An LTS is created for the LPT created due to any of the preceding actions.

  • A manually closed loan can be restored back to its previous state by reversing the OLT of the type Manual Loan Closure.

  • On reversing a Manual Loan Closure OLT:

    • The loan is restored back to its previous state.

    • The Manual Loan Closure OLT is marked as reversed.

    • The Last Transaction Type restores to the previous transaction type.

    • Another OLT of the type Manual Loan Closure Reversal is created.

Enable Manual Closure of Loan

To enable the manual closure of loan, the Manual Closure flag needs to be enabled while performing the following actions:

While Creating a Contract

Prerequisites

Before enabling the manual closure in a loan, ensure that the following prerequisite is met:

  • A lending product is created.

Steps

To enable the Manual Loan Closure flag in a loan, perform the following steps while creating a contract:

  1. Log in to your Salesforce account.
  2. Click (App Launcher).
  3. Search for CL Loan, and then click it.
  4. Go to CL Contracts > New.

  5. Select the mentioned product type, and in the Additional Parameters section, select the Manual Closure checkbox.

  6. Specify the other required details, and then click Save.

While Editing a Contract 

Prerequisites

Before enabling the manual closure in a loan, ensure that the following prerequisite is met:

  • A contract is created.

Steps

To enable the Manual Loan Closure flag in a loan, perform the following steps while editing a contract:

  1. Log in to your Salesforce account.
  2. Click (App Launcher).
  3. Search for CL Loan, and then click it.
  4. Click the CL Contracts tab, and then from the list of contracts, select the required CL contract ID.

  5. On the CL Contract page, click Edit Additional Parameters.

  6. In the Additional Parameters section, select the Manual Closure checkbox, and then click Save.

While Editing a Lending Product

Prerequisites

Before enabling the manual closure in a loan, ensure that the following prerequisite is met:

  • A lending product is created.

Steps

To enable the Manual Loan Closure flag in a loan, perform the following steps while editing a lending product:

  1. Log in to your Salesforce account.
  2. Click (App Launcher).
  3. Search for CL Loan, and then click it.

  4. Go to Lending Products> View/Edit Lending Products > Loan Products , and then click Edit Additional Parameters.

  5. In the Additional Parameters section, select the Manual Closure checkbox, and then click Save.

Close a Loan Manually

Prerequisites

Before closing the loan manually, ensure that one of the following prerequisites is met:

  • A loan contract having a payoff amount as zero.
  • A loan contract having a status as Active Marked for Closure.

Steps

To close a loan manually, perform the following steps:

  1. Log in to your Salesforce account.

  2. Click (App Launcher).

  3. Search for CL Loan, and then click it.

  4. Click the CL Contracts tab, and then from the list of contracts, select the required CL Contract ID.

  5. On the CL Contract page, click (Loan Quick Menu).

  6. In the Loan Quick Menu, click Loan Actions, and then scroll down and click Manual Closure.

  7. In the Manual Loan Closure window, click Confirm.

Reverse the Manual Loan Closure

Prerequisite

Before reversing the manual closure of loan, ensure that the following prerequisite is met:

  • A loan is closed manually.

Steps

To reverse a manually closed loan, perform the following steps:

  1. Log in to your Salesforce account.

  2. Click (App Launcher).

  3. Search for CL Loan, and then click it.

  4. Click Contracts, and select the required CL Contract ID.

  5. Go to Transactions > Other(s).

  6. Click the required Other Transaction ID that has the TRANSACTION TYPE as Manual Loan Closure.

  7. Click the highlighted arrow of the Other Loan Transaction page, and then from the list, select Manual Loan Closure Reversal.

  8. Click Confirm.

    The OLT is marked as reversed.

Scenarios

This section explains the actions that take place in various scenarios.

These scenarios are illustrated with the help of the following table:

ScenarioResult

Perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • Payoff amount is not zero, or the status is not Active - Marked for Closure.

An error message is displayed as depicted in the following image:

Do not perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • FIT = True
  • Current System Date = Draw Period End Date.
  • All the dues are paid.
  • Loan does not get closed, and remains in Active-Marked for Closure state.

Perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • FIT = true.
  • A payoff is made before or after the Draw Period End Date.
  • Funding Stop Basis = Draw Period End Date.
  • Loan gets closed with the status Closed-Obligations met.
  • An OLT is created of the type Manual Loan Closure.
  • An LTS is created for the transaction type Manual Loan Closure.

Perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • Principal, Interest, and Fees Remaining on the loan are zero.
  • Loan status is Active-marked for Closure.
  • Loan gets closed with the status Closed-Obligations met.
  • An OLT is created of the type Manual Loan Closure.
  • An LTS is created for the transaction type Manual Loan Closure.

Perform a manual closure reversal of an OLT of the loan.

  • The loan status is restored back to its previous state.
  • An OLT is created with the type Manual Loan Closure Reversal.
  • The LTS of manual closure is marked as reversed.

  1. Perform a manual closure of a loan in which:

    • Manual Closure flag is enabled.
    • A payoff tolerance amount is defined in the loan

  2. Then do a Manual Closure Reversal of the OLT.

  1. On closure:

    • Loan is closed with the status as Closed-Obligations met.

    • An LPT is created with the transaction amount as the tolerance amount, and is marked as cleared.

    • An OLT is created of the transaction type Manual Loan Closure.

    • An LTS of the transaction type Manual Loan Closure is created in the system.

    • Loan Transaction Statement with the following transaction types are created in the system: 

      • Manual Loan Closure

      • Closure Tolerance Payment Transaction

  2. On reversal of the Manual Closure:

    • The loan is restored back to its previous state.

    • The OLT of the manual closure is marked as reversed.

    • The LPT for the tolerance amount is marked as reversed.

    • An OLT of the type Manual Closure Reversal is created.

    • A new transaction of the type Closure Tolerance Payment Reversal for the tolerance amount is created.

Perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • A payment more than the required payoff amount is made leading to an excess amount available on the loan.
  • Loan is closed with the status as Closed-Obligations met.
  • An OLT of the type Manual Loan Closure is created.
  • An LTS of the type Manual Loan Closure is created in the system.

Perform a manual closure of a loan in which:

  • Manual Closure flag is enabled.
  • A rebate is provided on the payoff.
  • Loan is closed with the status as Closed-Obligations met.
  • An OLT of the type Manual Loan Closure is created.
  • An LTS of the type Manual Loan Closure is created in the system.

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