January 19, 2015

COMMERCIAL Enhanced Prepayment Penalties

Enhanced Prepayment Penalties

Enhanced Prepayment Penalties Processing is an optional component of the commercial system.

The enhanced option allows for the automatic calculation, assessment, and billing of prepayment penalties. Enhanced prepayment penalties can be assessed on both early payoffs and early principal payments (Curtailment Payments). Also, one-time or multiple prepayment penalties can be assessed.

Enhanced Prepayment Penalties methods will include the following:

  • Single or tiered fixed amounts of prepayment for periods of the loan
  • Single or tiered percentages of prepayment for periods of the loan, also known as the Staggered Percentage method
  • Yield Maintenance method
  • Manual Assessment method

Prepayment penalty processing occurs automatically upon entry of curtailments and early payoffs. The loan officer can waive the penalty before the penalty bill is generated and sent to the customer. If a prepayment pays off a loan, the prepayment penalty is assessed. A prepayment penalty caused by a paydown is assessed and billed immediately.

If multiple payment transactions are processed the same day, or if the prepayment is backdated so that it is before other payments already processed, the one payment that causes an early prepayment is used to trigger the penalty processing.