Payoff

The attributes of the Payoff Product Condition are explained below.

Expiry Days

It allows the user to define the expiry date for the payoff bill. The number of days defined are considered as working days and expiry date for the payoff bill can be calculated by adding Payoff date and the number of working days defined in this attribute. When the expiry date is reached, the system invalidates (deletes) the payoff bill.

Settle Dues

It allows the user to specify if the amount made due to the customer between the simulation start date and payoff effective date should be considered settled or not.

Setting this attribute to YES enables the auto settlement of future dues. Setting it as NULL or NO does not allow to settle the due amounts automatically.

When set to YES, the Settle Due Act is mandatory.

Percentage

It allows the user to define the tolerance value defined as a percentage of the total payoff amount.

Fixed Amount

It allows the user to define a currency specific absolute tolerance amount.

Currency

It allows the user to define the currency code for currency specific tolerance amounts.

Action

It allows the user to define the Action that should happen with any shortfall within tolerance.

The available value is:

WRITE.OFF – The amount will be written off according to the accounting rules defined by the bank.

The accounting events can be configured to use the PL category related to this write-off action of tolerance difference.

• Overrides are generated if the payoff amount less than repay amount.
• When payoff amount is within the tolerance amount, the override ’AA-PAY.WITHIN.TOL’ is generated indicating payment amount, payoff amount and the tolerance used.
• An error is generated when the payoff amount is greater than the tolerance amount.

The Pay charges are automatically included while calculating payoff amount.

If the attribute is left blank, the short balances remains on the loan for the bank to deal with manually. If the shortage is on an interest bearing balance (for example, principal), it can continue to accrue interest.

Settle Act

It allows the user to define the settlement Activity to be automatically invoked while calculating payoff amount in simulation mode or when the arrangement is paid off in live using SETTLE Activity of Payoff Property Class.

This allocation Activity is used to settle the payoff bill. This Activity will be run against the Payoff Activity to calculate the pre-payment penalty charges. Any prepayment charges needs to be attached to this Activity.

When there are existing dues apart from current dues, the system looks for settlement definitions under Payment Rules Product condition.

Settle Due Act

It allows the user to define the settlement Activity to be automatically invoked when due amounts between simulation start date and Payoff effective date are to be considered as settled.

When the arrangement has unallocated credit balance during a payoff request, this UNC balance is reduced to arrive at the payoff amount automatically

Payoff Bill is generated through either AA.SIMULATION.CAPTURE application.

Following are the steps involved in creating a Payoff Bill using Simulation Capture:

• The user has to input Simulation Capture for an arrangement with Activity set to LENDING-CALCULATE-PAYOFF.
• The Effective Date field indicates whether Payoff date is forward or today.
• On authorising the Simulation Capture, the system triggers the LENDING-ISSUE-PAYOFF Activity and creates a record in AA.SIMULATION.RUNNER. Simulation runner contains the list of Activities to be triggered from today to Payoff.
• After authorising the Simulation Capture and running the AA.SIMULATION.SERVICE service, the system updates the $SIM files.
• When the user commit and authorise the simulation runner with the Execute Simulation field set to Yes and running the AA.SIMULATION.SERVICE service, the system writes the Payoff Bill in live files.
• When payoff is forward dated (Simulation capture date: 4th Dec and Payoff Date: 14th Dec), the system can be set up either to consider the interim bills are settled or outstanding ( any scheduled payments between the capture date and Payoff date).
• During Payoff, if the Expiry Days field is left blank and if the settlement does not happen on 14th Dec, the system invalidates the payoff bill on the same day close of business.

• Payoffs can be requested at any point during the life of the loan and the effective date can be either equal to the system date or forward dated.
• The payoff statements are for only information so the customer is not expected to make the payment on the payoff effective date. It is just another simulation Activity like Loan modelling.
• LENDING-CALCULATE-PAYOFF Activity can only be run in simulation mode and cannot be triggered by the user or scheduled. The Activity should use the CALCULATE Action to determine the payoff amounts. The action routine calculates the total outstanding amount of the loan contract as on the payoff date including all overdue amounts and current amounts.
• SIMULATION.RUNNER is used to simulate LENDING-CALCULATE-PAYOFF Activity with the simulation end date as the required payoff and the Payoff Activity need to be captured with the Activity date as the required payoff date.
• Prepayment charges can be set as a periodic rule or Activity charge. Usually, banks allow prepayments up to a certain limit, which can be a percentage of the loan amount or a fixed amount for a rolling period like anniversary period (in a year, the customer is allowed to prepay a percentage of the loan and is usually cumulative).
• To define this in AA, a periodic rule can be setup in Payment Rules Property to calculate the prepayment charges when excess prepayments are done, or the prepayment charges may simply be a fixed amount, which can be setup as Activity Charges on prepayment Activity.
• Consider that payoff is forward dated (Simulation capture date: 4th Dec and Payoff Date: 14th Dec), and there is a scheduled payment on 10th Dec. If the Settle Dues attribute is set to Yes, the system triggers the repayment Activity automatically.

Consider an arrangement with no overdue, and the Expiry Days attribute is set as 1. For the arrangement, the payoff bill gets invalidated after one working day. For example, the payoff date is 29th Dec and expiry date is 1st Jan (assume after 29th Dec next working day is 1st Jan). Then the system updates per diem for 30th Dec, 31st Dec and 1st Jan in payoff bill.

• The user can generate the payoff bill online as well. For example, a payoff bill generated by the system was used in the previous case.
• The user can change the Property amounts using the LENDING-ADJUST.INFO.BILL-BALANCE.MAINTENANCE Activity so that the payoff bill is updated with the adjusted amounts.
• The user can trigger the LENDING-ISSUE-PAYOFF Activity manually so that delivery messages can be triggered with new payoff bill details.