This recipe describes enhancements to the CU*BASE Write-off/Charge-off database and analysis tools.
Recently Implemented
Project 1(a): Write a new program to calculate daily accruals on written-off loans
This is a completely separate program from other loan accruals, but calculates in much the same way. We 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 is recorded in a new “bucket” stored along with the other write-off data (see project 1b below). This is an informational figure only; these “accruals” will not interface with the credit union’s books.
Status of project 1(a): Project #55515 was implemented with the 22.05 release.
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 is expanded to include additional fields. New data captured at 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 was implemented with the 22.05 release.
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.).
Status on Projects 2 and 3: Will begin design work during the second half of 2022.
Other Related Efforts
Tool #476 Written Off Loan History Dashboard is enhanced to help credit unions track recovery amounts for written/charged off loans. We are adding the option to use end-of-month balances for calculating the net change amount that displays on the dashboard. That way the credit union can compare loan balances from EOM December to EOM June (as an example) to determine the amount recovered during that time frame. This will be helpful for 5300 reporting. Status as of June 2022: Project #56556 is in process.
Check out the new “Tracking Charge Offs and Recoveries for the 5300 Call Report” section added to the Write Off & Charge Off Tools booklet that includes tips and recommendations for analyzing and assembling data that we already have to determine YTD Charge Offs and YTD Recoveries information. We will continue to work on training and additional documentation to help the tracking of written and charged off loans.
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.