This recipe describes enhancements to the CU*BASE Write-off/Charge-off database and analysis tools. During December of 2020 we started re-energizing the project, and have already submitted specifications for the first couple of project segments.
Currently In Process
Project 1(a): Write a new program to calculate daily accruals on written-off loans
This will be a completely separate program from other loan accruals, but will calculate in much the same way. We’ll use the rate and current balance (CURBAL) from the loan account record, calculating a per diem using the 365 daily interest calc type for all written-off loans. The results of this daily calculation will be recorded in a new “bucket” stored along with the other write-off data (see project 1b below). This will be an informational figure only; these “accruals” will not interface with the credit union’s books.
Status of project 1(a): Project #55515 is in development!
Project 1(b): Expand the written off loans database table (LNWRTOFF)
To record the new daily accrual as well as other details, the existing database will be expanded to include additional fields. New data we’ll capture as of time of write off:
- Rate as of write-off (informational only; this is also retained on the MEMBER5/6 record)
- Interest due as of write-off (informational only; this is also retained on the MEMBER5/6 record)
- Interest calc type as of write-off (informational only; not retained on MEMBER5/6)
New “bucket” fields which can be maintained by the CU at/after write-off:
- Interest accrued since write-off (see project 1a)
- Judgment amount (we already have a place for the date)
- Total collection expenses
- Total other fines/fees
- Comments (free-form text to record things like judgment details, composition of the collection expenses or other fees, etc.)
Status of project 1(b): Project #55515 is in development!
Our Vision for Future Projects
- Project 2(a): Create a payoff calculator, maybe something similar to the “prepare mortgage for payoff” tool.
- Project 2(b): Change how payments are collected to automate collection of the interest accrued since write-off (once principal and interest due are paid down to zero).
- Project 3: Create a new subsidiary activity history tied to the WO loan data to automate the detail behind the new buckets (collection expenses, other fees/fines, etc.).
- Project 4: Enhancements to Written Off Loan Dashboard (Tool #476) to help track recovery amounts for written/charged off loans. Status: Specifications submitted for PS#56556.
Status on Projects 2 and 3: Will begin design after projects 1(a) and (b) are getting near to implementation.
Other Related Efforts
We are also working on a training and documentation project to help CUs gather this data for 5300 reporting. We’ll analyze how we can use data we already have to calculate recoveries on written-off loans, and make recommendations on how CUs can analyze and assemble it in a way that fits their needs. What we learn will also inform what we might develop as far as dashboard enhancements, etc.
We will also work on documenting recommendations for reinstating loans after a judgment, with tips and ideas about methods that work well with existing CU*BASE tools.
We Want to Hear from You
Give us your feedback, ideas, and suggestions so we can consider them as we continue to shape the final design. And if you’d like to talk to someone, reach out to the chefs for this recipe: Randy Karnes and Dawn Moore.
Along these same lines it would be nice to have an enhances way to track written off Shares as well. What has been recommended to me so far is to scan in a document on why the Share was written off and scan to IDoc vault and utilize member comments and enter amount owed each time they pay and/or keep a spreadsheet. All of these seem outdated and set us up for human errors. Most written off Shares are paid via the teller line, so my front line folks need to know how much they owe and be able to take those payments
It’s very important to be clear what “write off” means compared to “charge off.” In CU*BASE loans can be written off, meaning they are still collectible. The loan account remains on the membership and payments can be processed via normal channels. It’s a tracking and accounting-only change, for the most part. The loan is still an open account, in other words.
Charging off means closing the account entirely. CU*BASE does not have a write-off system for shares, although we do have charge-off tool that assists with closing the account and moving the negative balance to a GL.
We currently have no plans to develop a write-off system for savings/checking accounts.