Introduction

9.1 Introduction

Any change to the terms of a loan, which affects its financial details and the accounting entries, can be made through the Value Dated Amendment function of Oracle Lending. Through this function you can make changes to authorized loans on any day before the Maturity Date of the loan.

The changes to the terms of a loan, notified through this function, take effect on a date referred to as the Value Date. That is why the changes brought about by this function are called Value Dated Amendment.

A Value Date could be:

Today
A date in the future
A date in the past

Using the Value Dated Amendment function, you can make changes to the various components of a loan such as:

Additional disbursement of Principal
The interest rate or amount
The fees
The Maturity Date

When you make a value dated amendment, only the accrual entries are passed by the Value Dated Amendment function. All the other accounting entries are passed by the Automatic Daily function.

If the value date is a date in the past, it should not be beyond the last payment date for any component.

You should ensure that a contract - on which you plan to make backdated changes - does not have amortized schedules.

In addition, a value date in the future cannot be beyond the Maturity Date of the loan. If it has to be beyond the Maturity Date of the loan, you have to first postpone the Maturity Date of the loan so that your proposed future value date falls before the new maturity date. Only after this change is authorized can you fix a value date in the future for the loan.

The system defaults to today’s date.

Note:

If a contract is pending for authorization in any screen and if you try to unlock in OLDVAMND to do changes, then an error message Unauthorized amendments exist for contract in function id appears.

Specify the User ID and Password, and login to Homepage.

On the homepage, type OLDVAMND and click next arrow.
The Loan and Commitment - Value Dated Amendment screen is displayed.

Figure 9-1 Loan and Commitment - Value Dated Amendment

Description of "Figure 9-1 Loan and Commitment - Value Dated Amendment"

You can do financial amendments in this screen, only for non-bearing products when Allow schedules for discounted check box is selected at the contract level.

Enter the reference number of the loan to which you want to make amendments. The main details of the loan is displayed in the screen.

Note:

The Ticket Id field is displayed only when the individual SLT trades get handed off to LS and then to OL (Origination). If the setup is to consolidate all the trades across the tickets for a CUSIP, the ticket Id is not displayed for any trade.

You can make an additional disbursement through the Value Dated Amendment function.

If you increase the principal amount, the increased amount is put into the last principal payment schedule. You, then, have to authorize the schedule, which the system has redefined to maturity. Only then you can define new schedules, as per your requirement, through the Contract Schedules screen.

For a loan, you can increase the principal through the Value Dated Amendment function. If you want to decrease the principal, you have to treat it as a repayment.

Note:

VAMI reversal is allowed only for principal increase and not supported for interest rate or maturity date changes.

You can make payment on the value date and amendment can be done on the value date of the contract.

If a discount accrual component is attached to the contract and if there is a change in the amount due, then the IRR is recomputed.

For back value dated VAMI beyond the liquidation date, the IRR is recomputed, if there is a change in the amount due. The catch up YACR is due to the recomputation posted online, provided if there is a fee liquidation done prior to the VAMI.

The tier based spread is recomputed on payment of principal on the value date and on value dated amendment provided if there is a change in the principal amount.

If there is a VAMI beyond the liquidation date with the value date as value date of the contract, then the principal amount to be increased is adjusted in the bullet schedule and the interest amount is recomputed. The amount to be settled is adjusted based on the net amount paid (Total paid - Total amount reversed - Refund amount) depending on the parameter selected at the product level.

Value date amendment is not allowed for rate type change of capitalized type loans.

You can either link a single facility or multiple collateral/pool to an OL contract. For the Collateral/Pool/Facility linkage, you should specify the linked amount and linked %. Based on this contract amount utilization takes place.

In OLDTRONL, if you alter the Contract Amount, and on Save of the contract amendment, the system does the following:

Reverses the Utilization that has happened.
Alters and updates the utilization amount for the amended contract amount.

For more information, refer to Linking OL contract to a facility or multiple collateral/pool section.

Table 9-1 Loan and Commitment - Value Dated Amendment

Field	Description
Outstanding Amount	Total outstanding amount of the loan contracts.
Value Dated Amendment beyond Rate Revision/Rate fixing Date	You can do value dated amendment beyond rate revision/rate fixing date. Only principal Increase and Spread change are allowed as part of this amendment. Note: During value added amendment, you can change any interest component to floating and give the rate fixing days during amendment.
Schedule Amendment of Non-Liquidated Past Schedules	You can amend the repayment schedules if the schedule due date is in the past.
Amendment beyond Liquidation Date	Amendment beyond liquidation date can be done both for commitments and loans.
Spread Change Beyond Liquidated Schedules	You can change the spread for a effective date beyond a liquidated schedule, however it calculates the interest only from the last liquidation date. Changes are done to re-compute the interest, from the effective date of the Spread provided the Spread type is Slab/Tier. If the Spread type is flat, then the spread can be changed from Value Dated Amendment Screen. Based on the re-computation, if the amount due (interest to be liquidated) for a schedule changes, then based on the net interest paid (Amount paid-refund amount-amount reversed) the schedules are adjusted automatically. Note: For a commitment, you can also decrease the principal amount as only contingent entries are passed.
Negative Value Dated Amendment	You can reduce loan balance in case of an HFS transfer by selecting the ‘HFS Transfer’ check box. The system then posts the corresponding accounting entries as per the product set-up for HFS transfer. Negative VAMI for Loan reduces CoC balances such as contra and write off, along with HFI loan position.

Parent topic: Making Additional Disbursements and Rate Changes