Setting up Interest Rate for SCRA

A.3.1 Setting up Interest Rate for SCRA

You can define different interest rate which will be an input parameter for the ON ACTIVE MILITARY DUTY transaction. The system enables you to override default rate values with the values you define. However, if the values are not overridden, then system will pick the transaction from system parameter TPE_SCRA_DEFAULT_INTEREST_RATE.

The system will apply lowest rate between contract and system default interest rate. However, you can indicate to override the Rate with one entered in the transaction input parameter.

Access to the transaction and availability of the Override and Rate parameters are setup in Transaction Codes Access Grid and Parameters, respectively.

When the transaction is under BORROWER ON ACTIVE MILITARY DUTY status, the system facilitates setting up and validating the following:

While posting On Military Duty transaction, provides flexibility to choose the Fee to be applicable through Fee Assessment Access Grid, based on On Military Duty account condition created in the account.
You can not initiate Foreclosure / Repossession activities on active military duty accounts.
The monthly payment amount must not exceed the existing payment amount.
During deferment period, enables you to define NO Interest to be charged by defining Stop Accrual to the EXTENSION transaction for the same terms of Extension. A batch job re-starts Interest Accrual, once the system posts comments for the same.

Once the OFF MILITARY DUTY transaction is posted on account, system facilitates setting up and validating the following:

The contractual terms are returned once the SCRA condition is removed. That is, the payment amount, terms, and interest rate must revert to their pre-SCRA state. Thus, resulting in a balloon payment at the end of Loan.
To extend On Military Duty benefits, you can perform any of the following:
- OFF Military Duty transaction must not be posted
- If already posted, OFF Military Duty transaction must be REVERSED
- Close current Military Duty by posting the OFF transaction and then opening a new Duty period by posting the On Military Duty Transaction. Ensure not to overlap the periods.

Note the following for new accounts created on SCRA

If a borrower is on Active Military Duty for an existing account and the same customer ID is used to create a new account, system by default does not provide SCRA benefits by updating the SCRA Interest Rate. Instead the account is created with Contract Interest Rate.

For SCRA Interest Rate to be effective on new account, the Borrower on Military Duty transaction has to be posted explicitly. For more details, refer to Active Military Duty in Monetary Transactions section.

Parent topic: Processing SCRA