Contingency Status Codes
Contingency status codes are event-driven status codes that are applied to a loan contract after a certain event has occurred that hinders the borrower's ability to repay the loan. These events could be specific to the borrower or to the loan.
By default, the following contingency status codes are available in CL Loan:
Bankruptcy (B)
Duplicate (K)
Deceased (D)
Fraudulent (F)
No Communication (X)
Suspend Disbursal (Z) (applicable only for LOC and loans funded in tranches)
Contingency status codes behavior
You can define a contingency status code, and the actions associated with it.
You can change the associated actions of a default contingency status code.
Application of the codes can be done manually from the CL Contract page, or through the rule engine, which in turn runs the ContingencyStatusChange job.
When a contingency status code is applied, all the actions associated with it take affect on the selected contracts.
Only one contingency status code can be active for a loan contract at a time so when a new code is applied the previous code gets revoked.
All loan actions involving reschedule, such as Reschedule action, and Due Day Change action are stopped while a contingency status code is active.
You can edit, delete, and revoke a contingency status code for a contract.
Once the contingency status code expires, or the reason for applying it ceases to exist, or is resolved, and you remove the contingency status code, the blocking actions that were applied are resumed.
Defining contingency status codes
You can define a new contingency status code and the actions related to it.
Perform the following steps to define a contingency status code:
Log in to your Salesforce account.
Click Servicing Configuration > Product > Product Management > Contingency Status Codes.
On the Contingency Status Code Definition page, give a name to the contingency code and associate a set of actions to it.
To know more about the actions that can be associated with contingency codes, refer to the Actions Description table.
Applying contingency status codes
You can apply the contingency status codes manually on a contract at a time, or through the rule engine on all the contracts that satisfy the criteria specified in the rule engine.
Prerequisites
The following are the prerequisite to applying a contingency status code:
The contract is Active.
For applying Suspend Disbursal contingency status code the contract is an LOC loan or a loan funded in tranches.
Applying contingency status code manually
A contingency status code can be applied on a contract. This is a manual process. After the code is applied, the associated actions take affect on the contract.
Steps
Perform the following steps to apply a contingency status code on a contract:
Log in to your Salesforce account.
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On the CL Contract page, under the Contingency Status Codes tab, click New Contingency Status Code.
The Apply/Edit Contingency Status Code page appears.
Click the Contingency Status Code Setup lookup to view the default and the user-defined contingency status codes.
Select the code that you want to.
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The actions associated with the selected code appear with selected check boxes.
Note:To know more about the actions, refer to the Contingency Status Codes#Actions Description table.
Click Save.
The selected code is applied, and the associated actions take affect on the contract.
Applying contingency status code through the rule engine
You can use the rule engine to apply the contingency status codes on all the loan contracts that satisfy the defined criteria.
Rule engine can consist of one or many rules. A rule can consists of one or many criteria that define the loan contracts on which the rule is to be applied. The criteria are executed as defined in the evaluation criteria expression. A number of rules can be grouped to form a rule set. Within a rule set the rules are executed in the order of their priority.
Steps
Perform the following steps to define a contingency status code rule:
Log in to your Salesforce account.
Click Servicing Configuration > Product > Product Management > ContingencyRules.
On the Contingency Status Code Rules page, click Add New Rule.
Give a name to the rule.
Set a priority to the rule. The rules in a rule set are executed in the order of their priority.
Specify the criteria details. You can define one or more criteria.
In the Evaluation Rule text box, specify the boolean expression to execute the criteria. For example the expression 1 AND (3 OR 4), fetches the objects that satisfy criteria 3 or 4, and 1.
Define the actions related to the rule set.
To know more about the actions that can be associate to the contingency codes, refer to the Actions Description table.
Example
A rule set with the name Contingency Status Change, is created.
It consists of two rules Rule A and Rule B.
Rule A is set to priority 1 and Rule 2 is set to priority 2 so Rule 1 is executed before Rule 2 is.
Understanding Rule A
The following image describes the details of Rule A.
Rule A fetches the loan contracts that satisfy both Criteria 1 and Criteria 2 as defined under Evaluation Criteria.
The loan contracts that have Interest Capitalization enabled and whose Last Activity Date was before 11th June are fetched.
The fetched loan contracts are marked as Duplicate.
Actions associated with the contingency code Duplicate (K) are applied on these contracts.
Understanding Rule B
The following image describes the details of Rule B.
Rule B fetches the loan contracts that satisfy both Criteria 1 or Criteria 2 as defined under Evaluation Criteria.
The loan contracts that have Delinquent Amount more than 500, or have more than 60 Delinquency Grace Days are fetched.
The fetched loan contracts are marked for Bankruptcy.
Actions associated with the contingency code Bankruptcy (B) are applied on these contracts.
Revoking a contingency status code
A contingency status code can be edited to revoke it earlier than the original revocation date and actions that had been put on hold can be resumed.
Fields reference table
Field Name | Description |
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Suspend ACH |
This action suspends the ACH transactions for the contract. ACH (Automated Clearing House) is a nationwide EFT (Electronic Funds Transfer) system that provides for the inter-bank clearing of credit and debit transactions and for the exchange of information among participating financial institutions. It is a batch processing system in which financial institutions accumulate ACH transactions throughout the day for later batch processing. ACH Network transactions are transmitted electronically. This leads to faster processing time and cost savings. |
Stop Accruals | This action stops the interest accruals on the contract. |
Suspend Communication | This action suspends any communication on the contract. |
Suspend Disbursals | This action suspends the disbursals towards the contract. |
Suspend Charges | This action stops the periodic charges on this contract. |
Stop Accrual Entries | This action stops the accrual entries for the contract. |
Invalidate Contract | This action invalidates the contract. |