HELOC End of Month

Lending Lending HELOC End of Month

1. Introduction

The FLEX HELOC (Home Equity Line of Credit) Module is designed to run once a month on a credit union-determined date. This process is crucial for calculating interest on each HELOC loan based on the average daily balance and for generating HELOC Statements.

2. Purpose

The HELOC End of Month process serves to:

  • Calculate interest on HELOC loans based on the average daily balance.
  • Generate monthly HELOC Statements.
  • Ensure accurate financial reporting and member communication for HELOC products.

3. Prerequisites

Before running the HELOC End of Month Period Cycle, it is essential to verify that the general control parameters have been properly set up. Typically, this configuration is a one-time process unless credit union procedures change.

4. Accessing HELOC End of Month

The HELOC Loans menu, which contains the HELOC End of Period Cycle option, is found under Loans in the FLEX Main Menu:

  1. Navigate to Loans.
  2. Expand HELOC Loans.
  3. Select HELOC End of Period Cycle.

5. HELOC Control Parameters (Configuration)

The “Control Parameters” screen (HE1070S) allows for the configuration of various settings that influence the HELOC End of Month process.

5.1. GL Offsets & Fees

  • Over Limit Fee GL: Determines the General Ledger (GL) account to which over-limit fees (if any) are posted.
  • Cash Advance Fee GL: Determines the GL account to which cash advance fees (if any) are posted.

5.2. Statement Processing

  • HELOC Statement Sequence Code: Indicates the order in which HELOC Statements will be printed:
    • 1: According to setup order
    • 2: By Account + Suffix
    • 3: By Zip Code
    • 4: By Name (Last, First)
  • C.A.S.S. Certification: Indicates if the statement should be sorted into CASS-certified or non-CASS-certified addresses.
  • HELOC Statement Printer: Indicates the printer Output Queue (OUTQ) where statements will be spooled and held.
  • Account Number Mask: Provides for masking the account number on the printed statement. Enter a replacement character (e.g., X) in the positions of the account number to be masked.
  • Load STMT Fee File: Set this field to Y if the Statement Fee program is used and the credit union charges a fee for paper HELOC Statements.
  • HELOC Statement Message: Enter the message that will appear on the top portion of the HELOC Statement.

5.3. HELOC Month End Processing

  • Last Statement Date: Displays the date of the last HELOC Month End run.
  • Create Statement if No Activity: Determines if a statement is generated for HELOC loans with no activity during the period.
  • Exclude Unpaid Int from Ave Dly Bal: Indicates if unpaid interest should be included in the average daily balance calculation (used to determine the required payment).
  • Reset Partial Payments: If set to Y, partial payments will reset to $0.00 during the HELOC EOM process.
  • Preload Partial Payments if Delq: Indicates if the partial payment should be set to the difference between last month’s payment and the current month’s payment.
  • Update Orig Balance at Conversion: If set to Y, the original balance will be replaced with the current balance at the time of loan conversion.
  • Print Conversion Pre-Notice on Stmt: Determines if conversion pre-notices will be printed and included on the HELOC Statement.
  • Print Conversion Notice on Stmt: Determines if conversion notices will be printed and included on the HELOC Statement.
  • Max Days Delq for EOM Cycle Run: Determines the maximum number of days a loan can be delinquent and still be processed with the HELOC End of Month cycle. Loans not processed will not be charged fees, interest, or generate a statement.
  • Prompt/Print New Rate on Statement: Indicates if the new rate is to be printed on all statements. Note that this setting does not actually change loan rates.
  • Interest Only Payments: Indicates if the payment amount is equal to the interest due for the prior month (based on the average daily balance).
    • Y: The entire payment will go to interest (interest-only payment).
    • N: Payment is calculated based on the configuration for the loan type (Type Configuration – Loans). Interest due is based on the average daily balance of the prior period. If interest due is greater than the calculated payment, the payment is increased to cover the interest due.
    • T: Parameter is specified by loan type (Type Configuration – Loans).
  • Minimum Principal Amount: If a minimum principal payment amount should be included in the required payment, the amount is entered here.
  • If Using P, Add Interest to Payment: If the payment is a percentage of the balance, this determines if new interest should be added.
  • If Using P, Use Original Balance: If the payment is a percentage of the balance, this determines if the percentage should be based on the Original Balance (as shown in the loan file).
  • Print Principal/Interest Breakdown: Indicates if the next payment breakdown (e.g., “Next Payment Breakdown Principal $105.02, Interest $25.03”) is to be printed on the statement.
  • Add Last Ins Prem to Pmt (int only.): This option is only valid if the payment is based on interest only and the credit union offers credit life and disability insurance on HELOC loans.

6. Running the HELOC End of Period Cycle

The “HELOC End of Period Cycle” option allows you to run either a worksheet (simulation) or perform the actual posting. FLEX strongly recommends always running a worksheet before posting.

6.1. Processing Mode

  • Worksheet:
    • This option generates a worksheet with all HELOC End of Period information.
    • Click WORKSHEET to process.
    • Note: This procedure is a worksheet only. It will simulate the following:
      • Posting of over-limit fees.
      • Calculation of Average Daily Balance.
      • Calculation of interest due/new payment amount.
      • Printing of monthly statements.
      • Conditional clearing of partial payments.
      • Setting of ending statement balance and next statement history fields.
  • Posting:
    • This option begins the actual processing of the HELOC End of Period Cycle.
    • Click POSTING to initiate the HELOC End of Period Cycle.

6.2. Statement Period

  • From Date: Determines the beginning date of the HELOC statement period. This defaults to one day later than the “Last Statement Date” from HELOC Control Parameters.
  • To Date: Determines the end date of the HELOC statement period.

6.3. Options (Displayed only on Worksheet Run)

  • Submit to Batch: If checked, the job will run in the background and release the screen when “Process” is selected. This is typically not required as the program runs quickly.
  • Include Non-Active Accounts: Check this box to include non-active HELOC loans in the End of Period processing worksheet.
  • Run HE5040Q in CMCQUERY: If checked, this will run the HE5040Q query, which includes Account, Suffix, Current Balance, Credit Limit, Payment Amount, Current Due Amount, EOM Interest, and Unpaid Interest Outstanding.
  • Spool Pseudo Statements: If checked, pseudo statements will be spooled.

7. Confidentiality Notice

This document is published by Computer Marketing Corporation/FLEX and is intended solely for its contracted clients. It may contain information that is privileged, confidential, or otherwise protected from disclosure. Dissemination, distribution, or copying of this document and any accompanying attached information by someone other than the intended recipient(s), or an employee or agent acting on behalf of the intended recipient, is strictly prohibited.