Rescheduling a CL contract
In case a borrower does not follow the repayment schedule on a loan contract, with respect to the due date or the due amount, the lender can either continue with the payments as received, and adjust any differences in the last payment, or reschedule the loan in order to restructure the payments. You can reschedule loans that are in Active Good Standing or Active Bad Standing only.
A borrower can request for either of the following reschedule options for the payoff:
Shorter term with bigger repayment amounts
Longer term with smaller repayment amounts
As part of rescheduling a loan, you can revise the following:
Interest rate
Payment term
Interest only period
Payment amount during interest only period
Following are the results of rescheduling a loan:
The old amortization schedule is archived.
All the existing unpaid bills are ignored.
New bills are generated as per the revised repayment schedule.
The status of a delinquent loan changes from Active-Bad Standing to Active-Good Standing.
Repayments from this point forward are evaluated with respect to delinquency.
While the reschedule status is Pending, you cannot perform any action on the contract.
The revised repayment schedule is displayed when you preview your changes. To display the revised schedule upon saving, the org parameter Draw Amortization Schedule must be selected in Custom Settings.
The reschedule of a loan impacts only the principal and interest components of the borrower's dues. Any charges accrued, or unpaid must be cleared by the borrower.
Retaining the original payment amount - If you want to retain the original payment amount after reschedule, you must first reschedule the loan based on the terms the system allows you to modify, and follow this with a change payment amount action.
Reschedule of a loan funded in tranches - The draw period and interest only periods, if any, are kept separate. The Total Term field in the loan contract page, displays the total loan term as 'Current Term + Draw Term'. Here, current term is inclusive of any interest only period specified during the reschedule. The draw term is calculated based on draw period end date present in the loan contract.
Calculating the Interest Remaining - If the interest remaining (interest posted + interest accrued) is 0, that means borrower 's payments are complete as on reschedule date, and the reschedule may be for reasons not related to delinquency, such as, taking advantage of a drop in interest rates. However, if interest remaining exists, it is added to the payment schedule. The amortization schedule is generated to recover the interest remaining before the principal+interest payments start. For example, if interest remaining is 10,000 and the payment amount is 1000, then for the first 10 payments, principal = 0, interest = 1000. From 11th payment, recovery of principal begins.
Defining Holiday Schedules - The reschedule action may also be performed to add holiday schedules to an existing contract, if holiday schedules are defined for the related lending product.
Defining Step up Schedules - During reschedule, you can add and also modify existing step up schedules. For information on step up schedules, refer to section Defining step up schedule for payments and section Defining a Step up Schedule in the CL Loan Administration Guide.
Defining Rate Schedule - During reschedule, you can add a new rate schedule. For more information on rate schedules, see Rate Schedule Setup.
Rescheduling on the Loan Balance - By default the contracts are rescheduled on the principal remaining, but you can also reschedule on the loan balance.
If the rescheduling is done based on the loan balance then the new amortization schedules are prepared considering the loan balance as the new principal. If the fee and interest are not capitalized then the loan balance is equal to the principal remaining.
Maintaining Delinquency - If the delinquency is maintained, then the existing bills and schedules are kept as is, and the rescheduling is done on the future principal balance. To maintain the delinquency of a contract, select the Maintain Delinquency checkbox.
If the delinquency is not maintained, then the past bills and schedules are discarded and the loan schedules are created from the reschedule date. However, this option is not available if either of following configurations are active:
In Org Parameters, Draw Amortization Schedule is not selected. Due to this setting, system does not store the Amortization Schedule, which is essential to use this feature.
Existing CL contracts do not have amortization schedule stored for any other reason.
Example:
A loan contract with the following repayment schedule is created. The borrower has not paid the first two bills. During the third term the borrower wants to reschedule the loan and extend the number of terms by 3. The borrower does not want to reschedule the delinquent principal portion from today.
Scenario 1: If the Maintain Delinquency checkbox is selected: The schedules prior to reschedule transaction date are not archived. The reschedule action is performed only on the remaining principal amount based on the schedules, that is, based on term 4, 5, and 6.
Scenario 2: If the Maintain Delinquency checkbox is clear: The schedules prior to reschedule transaction date are archived.
Managing the default behavior of maintain delinquency option
The maintain delinquency option is enabled by default. To keep it disabled by default, select the Disable Autocheck Maintain Delinquency checkbox under the Setup, Custom Settings, Org Parameters, Edit section.
Specifying proposed payment plan
You can change the interest rate, payment start date and payment amount for future payments in the repayment plan. Any repayment schedules that are already over are removed, and only the payment plans effective as of the transaction date are displayed. However, repayment plan must start with the expected payment start date on the contract.
For example, a loan contract has a payment start date of 8/14/2015 and term of 20 months, with the following repayment plan. The first two sequences are specified by the lender and the third sequence is derived by the system.
On 10/25/2016, the lender wants to reschedule the loan. The system displays the following sequences as available for editing. Only payment schedule beyond the system date is available for editing. The system derived sequence for the balance terms is not displayed in the schedule. The Effective Date field for 10/25/2016 row is not editable.
Prerequisites
The following are the prerequisites to rescheduling a loan:
All existing uncleared loan payment transactions (LPT) are cleared or rejected.
The loan is active.
Steps
Perform the following steps to reschedule a loan:
Log in to your Salesforce account.
Click CL Contracts.
Select the required CL Contract ID.
Click Reschedule.
Specify the Transaction Date on which the repayment reschedule is set up. This can be backdated up to the last accrual date.
Specify the Repayment Start Date.
Specify the Interest Rate.
Specify Interest Only Period, if any.
Select the Frequency of Loan Payment, for example, Monthly, or Weekly.
Specify the Number of Installments in which the loan is to be repaid.
Click Preview to view the revised repayment schedule and the amortization schedule that shows the payment due dates and the break up of the principal and interest amounts.
Click Save to reschedule the loan.
Perform the following steps to validate that the loan is rescheduled:
Navigate to the CL Contract Detail page. The Rescheduled checkbox in the Loan Details section is now selected.
Click Repayment Schedule.
You can see the following details:
The old Amortization Schedule is marked as Is Archived.
Primary checkbox on the previously generated bill is deselected.
No bills are deleted when the loan is rescheduled, therefore, all the bills appear on the related list.
For reporting purposes, you should consider only bills marked as Primary, as these are the active bills.
Existing charges are not ignored.
Field Reference
| Field Name | Description |
|---|---|
| Transaction Date | It is the Date on which the repayment reschedule is set up. |
| Maturity Date | It is the final payment date of a loan, at which point all the interest remaining and the principal is due for payment. |
| Amortization Schedule | It is a table which has details of each periodic payment on a loan. |
| Interest Only Period | It is the period during which only Interest is calculated. |
| Maturity Date | Maturity date of the contract. If you are using CL Loan 2.400x, specify the Maturity Date for the contract; the last payment schedule is then created on the maturity date and the system calculates the number of installments based on frequency of payment, first payment date and maturity date. |
| Maintain Delinquency | If this checkbox is selected, reschedule calculates the new loan amount based on the schedules that are due after reschedule date. Repayment schedules whose due date is greater than reschedule date are archived. The earlier RSS is archived and a new RSS is created for new and previous un-archived schedules if any. If this checkbox is not selected, or the loan is in Active Good Standing status, then reschedule calculates the new loan amount based on the principal remaining and all repayment schedules are archived. |
| Loan Balance | It is Principal Remaining + Capitalized Interest + Capitalized Fees. For interest to be capitalized Is Interest Posting Transaction Enabled and Is Capitalization Enabled checkboxes must be selected. For fee to be capitalized Enable Fee Capitalization checkbox must be selected. |