In-House Credit Card: Variable Rate and Risk Based Lending Setup

This document provides comprehensive instructions for configuring Variable Rate Credit Card settings and Risk Based Lending (RBL) matrices within the FLEX system.

1. Variable Rate Credit Card Setup

To manage variable rate groups:

• Accessing Configuration:
  • In the FLEX Main Menu search bar, type “variable rate group”.
  • Select Variable Rate Group Configuration under Loans > Variable Rate Loans.
• Managing Groups:
  • Add New Group: Click the ‘Add’ button.
  • Edit Existing Group: Highlight the desired group and click ‘Edit’, or double-click the group.
• Group Information Fields:
  • Tied to Index Box:
    • Checked: Loans are tied to an index (e.g., prime) rate, and margin settings will be applied.
    • Unchecked: Loans are not tied to an index rate, and margin settings will not be displayed.
  • Current Rate Default: The default rate used when initiating a variable rate change.
  • Current Index Default: The default index used when initiating a variable rate change.
  • Maximum Life Increase Percent: The maximum percentage the rate can increase over the loan’s lifetime.
    • Example: If set to 4% and original rate is 12%, the rate cannot exceed 16%.
  • Maximum Life Decrease Percent: The maximum percentage the rate can decrease over the loan’s lifetime.
    • Example: If set to 4% and original rate is 12%, the rate cannot fall below 8%.
  • Maximum Incremental Increase Percent: The maximum percentage the rate can increase for a single rate change.
    • Example: If set to 1% and a 2% increase is needed from 13%, the system will only increase to 14%.
  • Maximum Incremental Decrease Percent: The maximum percentage the rate can decrease for a single rate change.
    • Example: If set to 1% and a 2% decrease is needed from 13%, the system will only decrease to 12%.
  • Maximum Yearly Increase Percent: The maximum percentage the rate can increase within a year.
    • Example: If set to 4%, the rate will not increase more than 4% of the original rate within the year.
  • Maximum Yearly Decrease Percent: The maximum percentage the rate can decrease within a year.
    • Example: If set to 4%, the rate will not decrease more than 4% of the original rate within the year.
  • Rate Floor: The absolute lowest rate allowed.
    • Example: If set to 4% and attempting to adjust from 4.75% to 3.75%, the rate will not go below 4%.
  • Rate Ceiling: The absolute highest rate allowed.
    • Example: If set to 15% and attempting to adjust from 14.25% to 15.25%, the rate will not exceed 15%.
  • Change On x Day Code: Determines the calculation of the “Next Change Date” after a rate change.
    • Beginning of the month: “Next Change Date” is the first day of the month when the next change should occur. Rate can change on or after this date.
    • End of the month: “Next Change Date” is the 28th of the month when the next change should occur. Rate can change on or after this date.
    • Exact day of the month: “Next Change Date” is the exact day of the month the last change was scheduled. Rate can change on or after this date.
  • # Of Days Before Change To Notify: Number of days before the “Next Change Date” to allow a pre-notice to be printed.
    • If set to 0, the pre-notice will only print on the exact change date.
  • Rate Change Frequency: Defines how often rate changes occur. Options include:
    • Monthly
    • Quarterly
    • Semi-Annually
    • Yearly
    • Every Two Years
    • Every Three Years
    • Every Four Years
    • Every Five Years
    • Every 7 Years
  • Maintain During Loan Entry:
    • Checked: Allows modification of the Variable Rate Loan Extension during new loan creation.
    • Unchecked: Requires the extension to be added via Loan Maintenance after the loan is posted.
  • Global Change: Used to update all member Variable Rate Extension records for the selected group.
    • This box is typically unchecked. To perform a global change, enter the changes, then check the box and click ‘Save’.
    • A warning prompt will appear before updating member records.

1.1. Variable Rate Notices

To create or maintain variable rate notices or disclosures:

• Accessing Configuration:
  • In the FLEX Main Menu search bar, type “variable rate notice”.
  • Select Notice Disclosure Maintenance under Loans > Variable Rate Loans.
• Managing Notices:
  • Add New Notice: Click the ‘Add’ button.
  • Edit Existing Notice: Highlight the desired notice and click ‘Edit’, or double-click the notice.
• System Defaults:
  • The system automatically uses default variable rate notices and disclosures for all variable rate loans.
  • To create a custom notice or disclosure, click the ‘Add’ button.
  • Note: Contact the FLEX Loan Support Team for assistance with configuring new variable rate notices or disclosures.

2. Risk Based Lending (RBL) Setup

To set or maintain a risk based lending matrix:

• Accessing Configuration:
  • In the FLEX Main Menu search bar, type “risk based lending”.
  • Select Risk Based Lending Configuration under System Administration > General Configuration > Configuration.
• Managing Matrices:
  • Add New Matrix: Click the ‘Add’ button.
  • Edit Existing Matrix: Highlight the desired matrix and click ‘Edit’, or double-click the matrix.

2.1. How to Use Range Options

Some fields in the RBL Configuration support value ranges:

• Single Value: Enter the matrix criteria in the first field and leave the second field blank.
  • Example: Loan Type NC (first field) to (second field)
• Value Range: Enter the low value in the first field and the high value in the second field.
  • Example: Loan Type NC (first field) to UC (second field)

2.2. New Fields at Release 8.02

• Card Type: Allows setting an index margin per card type.
• Rate Change: Allows setting an index margin per risk-based matrix option.

2.3. How to Find Options Using the Filter

The top section of the screen functions as a filter for Risk Based Rates options:

• Filter Usage:
  1. Use the “Field” drop-down to select the filtering criteria (e.g., “Interest Rate”, “Loan Amount”).
  2. Enter the desired low and high values in the respective fields.
  3. Click the ‘Add’ button to add the filter criteria.
  4. Click the ‘Run’ button to apply the filter and display matching options.
     • Entering more specific criteria will yield a smaller, more refined list.
  5. Click the ‘Filter’ button to toggle the filter section on and off the screen.
• Saving Filters:
  • Save: Click the ‘Save’ button to save the currently applied filter options.
  • Save As: Use “Save As” to save any changes to an existing saved query under a new name.

3. Turning On Risk Based Lending

For the system to display the RBL matrix, the loan type must be configured to allow Risk Based Lending.

• Accessing Loan Type Configuration:
  • In the FLEX Main Menu search bar, type “type configuration”.
  • Select Type Configuration under System Administration > General Configuration.
  • Navigate to the Loan Types tab.
• RBL Settings in Loan Type Configuration:
  • Viewing All Terms, Variable Groups, and Payment Methods:
    • Yes: Allows a Loan Officer to select an option from a list of matches, even if the application information does not perfectly match the RBL matrix.
  • Require Risk Based Rate:
    • Yes: Forces the system to always use Risk Based Lending. This requires all loan application or loan entry information to precisely match a matrix configuration for an RBL option to be displayed to the loan officer.
    • No: Allows for more flexibility in RBL matching.
• FLEX Recommendations for RBL Settings:
  • If “Require Risk Based Rate” is ‘Yes’: All other options under the Risk Based Section (e.g., “Viewing All Terms”, “Variable Groups”, “Payment Methods”) should be set to ‘No’.
  • If “Require Risk Based Rate” is ‘No’: All other options under the Risk Based Section should be set to ‘Yes’.
  • To turn off all RBL matching, set all items in the Risk Based Section to ‘No’.