Staged Funding

4.8.1 Staged Funding

Staged Funding

Staged funding for closed-end loans allows you to disburse funds to customers through multiple advances or draws up to the approved amount within a specified draw period.

To create a multiple disbursement contract for a transaction

In the Contract Definition section, click Add and complete the fields following the instructions above, making sure to complete the following steps:
- In the Advance Details section, select the Multiple Disbursement Permitted check box. When you select a contract instrument that permits staged funding (multiple disbursements) on the Funding screen, the system copies the information for that instrument from the Setup Module screen’s Contract screen to the Funding screen’s Contract screen.
  
  Note:
  You cannot clear the Multi Disbursement Allowed box in the Advance section on the Contract screen.
- Complete the fields in the Advance Details section to define the limits for initial and subsequent advances for staged funding.
  
  Note:
  This information appears in the Advance section of the Funding screen’s Contract link.
If you choose, set the following APPLICATION CONTRACT EDITS as an ERROR or WARNING on the Setup Module screen’s Edits screen.

Note:
For more information, see the Edits link (Edits screen) section in this chapter.

REQUIRED: ADV DRAW END DATE
XVL: ADV DRAW END DT MUST BE AFTER CONTRACT DT
XVL: ADV DRAW END DT MUST BE LESS THAN FIRST PMT DT - PREBILL DAYS

These edits appear on the Funding screen’s Verification screen.

Repayment scheduling for staged funding

When funding a loan, the system computes repayment schedules from the contract date, irrespective of whether funds have been disbursed or not. The system uses the approved amount (amount financed) for computing repayment schedules on the contract date.

As the might have been disbursed through multiple draws, or the draws have been less than the approved amount, or the amount may have been repaid in some amount before the draw end date, you may need to change the payment amount. In such cases, you can manually change the payment in the system by posting the monetary transaction CHANGE PAYMENT AMOUNT on the Customer Service screen’s Maintenance link.

Disbursements for staged funding

The approved amount for staged funding can be disbursed with the Funding screen or at a later time using the Advances screen. If the first disbursement is requested during funding, you may enter it on the Itemization sub screen of the Funding screen’s Contract screen.

If the entire approved amount is not disbursed during initial funding, it can be disbursed using the Advances screen’s Advance Entry screen.

If the initial amount on the Advance Entry screen is not within the minimum or maximum limits (as entered in the Advance Details section on the Setup Module screen’s Contract screen), the system displays any of the following error or warning messages in the Advances section’s Error Reason field:

ADVANCE AMOUNT IS LESS THAN THE INITIAL ADVANCE AMOUNT MINIMUM
-or-
ADVANCE AMOUNT IS MORE THAN THE INITIAL ADVANCE AMOUNT MAXIMUM

The Advance Entry screen also allows you to enter subsequent funding / disbursements. If subsequent advances are not within the predetermined minimum or maximum amounts, the system displays any of the following warning or error messages in the Advances section’s Error Reason field:

ADVANCE AMOUNT IS LESS THAN THE ALLOWED SUBSEQUENT ADVANCE AMOUNT
-or-
ADVANCE AMOUNT IS MORE THAN THE ALLOWED SUBSEQUENT ADVANCE AMOUNT

Additional messages in the Error Field regarding Staged Funding

If you attempt to post an advance after the draw end date, then the system displays the message in the Advances section’s Error Reason field as, ADVANCE DT IS AFTER DRAW PERIOD END DATE.

If you attempt to post an advance above the approved amounts, including tolerance, the system displays the message in the Advances section’s Error Reason field as ADVANCE AMOUNT IS MORE THAN THE TOTAL APPROVED AMOUNT INCLUDING TOLERANCE.

Since this is not a revolving loan, if any repayment is made against the approved amount principal balance, the system will not adjust the disbursed amount allowing for subsequent additional staged funding or advances.

Note:

There is no change to the payoff quote functionality in the system. The system uses the actual amount of the advance(s) and any interest accrued since the date of the last payment or credit in the PAYOFF QUOTE VALID UPTO DATE value when the payoff quote is requested before the draw end date.

Parent topic: Contract