19 User Defined Payment Patterns

User defined payment patterns allow you to define custom repayment patterns for products in your portfolio. You can include a payment pattern while generating cash flows by entering the payment pattern code as the amortization type code for the instrument. The Payment Pattern code can range from 1000 to 69999.

This chapter describes the procedure for capturing instrument payment patterns that are too complex to be accommodated in the standard fields of Instrument tables.

The procedure for working with and managing Payment Patterns is, similar to that of other Oracle Funds Transfer Pricing assumption rules. It includes the following steps:

·        Searching for Payment Pattern

·        Creating Payment Patterns

·        Viewing and Editing Payment Patterns

·        Copying Payment Patterns

·        Deleting Payment Patterns   

Search for Payment Patterns

Search for a payment pattern to perform any of the following tasks:

·        View

·        Edit

·        Copy

·        Delete

·        Check Dependencies

To search for payment patterns, do the following:

1.       Navigate to the Payment Pattern summary page. This page is the gateway to all payment patterns and related functionality. You can navigate to other pages relating to payment patterns from this page.

Figure 1:   Payment Patterns Summary page

2.      Enter the Search criteria.

§        Code or description of the Pattern

3.      Click the Search icon.

Only patterns that match the search criteria are displayed.

You can control the number of rows to display on screen by selecting the "Pagination Options" icon from the action bar.

Create Payment Patterns

You create payment patterns to capture the repayment behavior of instruments that are too complex to be accommodated through use of the standard instrument table fields.

To create the payment pattern, do the following:

1.       Navigate to the Payment Pattern summary page.

2.      Click Add Payment Pattern.

The Add Payment Pattern page is displayed.

3.      Enter a code value for the new payment pattern.

4.     Enter a brief description for the pattern.

5.      Select the Payment Pattern Type: Absolute, Relative, or Split.

6.     Define the Payment Pattern Term Specifications for payment phases.

The selection of the payment pattern type made in the previous step determines the information you must provide to successfully define that pattern type. See:

§        Defining Absolute Payment Patterns

§        Defining Relative Payment Patterns

§        Defining Split Payment Patterns

Define Absolute Payment Patterns

Absolute payment patterns are commonly used for instruments that are on a seasonal schedule, such as agricultural or construction loans that require special payment handling based on months or seasons.

When working with absolute payment patterns, it is sufficient to define payments for one calendar year. Once the term exceeds a year, the payment schedule will loop until the instrument matures.

To define absolute payment pattern, do the following:

1.       Select the Payment Type from the drop-down list: Conventional, Level Principal, or Non-Amortizing. The Payment Type determines the type of information required to successfully define the Payment Phase.

Figure 2:   Payment Pattern Type as Absolute Payment Pattern

2.      Define the Payment Phases. A Payment Phase is a set of payment characteristics that defines the time line of the instrument's amortization.

3.      Define the following parameters:

§        Month: This drop-down list allows you to select the month of the payment phase being defined.

§        Day: Used to specify the day of the month the payment is due.

4.     Select the Payment Method. The available Payment Methods depend on the Payment Type. For more information, see: Relation between Payment Method and Payment Types. Payment Methods do not apply to the Non-Amortizing Payment Type.

§        Enter the Value for the Payment Method you selected in the previous step for applicable Payment Types.

If you selected the Interest Only Payment Method in the previous step, the Value field does not apply.

5.      Click Add Another Row to add additional Payment Phases to the Pattern and click Delete corresponding to the rows you want to delete.

6.     Click Save.

The Payment Pattern is saved and the Payment Pattern summary page is displayed.

Important Notes:

When a detail instrument using an Absolute Payment Pattern is processed for Remaining Term cash flow processing, the Next Payment Date is internally calculated to determine which Payment Phase should be used. The calculated Next Payment Date is only used for this purpose. The Next Payment Date stored on the Instrument record in the Instrument table is always the date used for processing the initial payment.

The following table describes the relationship between Payment Phase properties and Payment Types.

The following table describes relationship between Payment Method and Payment Types.

Define Relative Payment Patterns

You create Relative Payment patterns for instruments that have irregular scheduled payments.

To define a relative payment pattern, follow these steps:

1.       In the Payment Patterns page, select Relative as the Pattern Type.

2.      Select a relevant Payment Type from the following options:

§        Conventional

§        Level Principal

§        Non-Amortizing

The payment type determines the available characteristics for defining the payment amount.

Figure 3:   Payment Pattern Definitions page

3.      Define the Payment Phase.

The payment type determines the type of information required to successfully define the payment phase. For more details, see: Relation between Payment Phase Attributes and Payment Types.

4.     Enter the Frequency for each payment phase.

5.      Select the appropriate Multiplier for each payment phase from the following options:

§        Days

§        Months

§        Years

6.     Enter the number of times each Payment Phase should be repeated in the Repeat column.

7.      Select the Payment Method.

The available payment methods depend on the payment type. For more details, see Relation between Payment Method and Payment Types. Payment Methods do not apply to the Non-Amortizing Payment Type.

8.     Type the Value for the Payment Method you selected in the previous step for applicable Payment Types.

9.     Click Add Another Row to add additional Payment Phases to the Pattern and click Delete corresponding to the rows you want to delete.

10.   Click Apply.

The payment pattern is saved and the Payment Pattern home page is displayed.

11.    You can use the Move Up and Move Down icons to move the Payment Phases up or down. Also, you can click the Delete icon to delete a row.

Any empty rows are ignored and not saved with the payment pattern.

Important Notes:

It is not necessary to set up relative payment patterns for the complete term of an instrument. The payment pattern automatically repeats until maturity date. Suppose a payment pattern is created to make monthly payments for the first year and quarterly payments for the next three years. If you apply this pattern to an instrument record with an original term of five years, the payment pattern wraps around and the fifth year is scheduled for monthly payments.

An easy way to set up payment patterns for instruments with varying original terms is to use the repeat value of 999 in the last row of the payment pattern. For example, a payment pattern that pays monthly for the first year and quarterly thereafter, can be set up with two rows. The first row shows 12 payments at one month. The second row shows 999 payments at three months. When this payment pattern is processed it repeats the three-month payment frequency until the maturity date is reached.

The following table describes the relationship between payment phase attributes and payment types.

Defining Split Payment Patterns

You use a Split payment pattern for financial instruments that make principal payments along two concurrent amortization schedules. Split patterns may be a combination of Absolute and Relative Payment Patterns for example, and contain multiple sets of payment phases under a single amortization code. These patterns could further use a combination of Conventional, Level Principal, and Non-Amortizing Payment Types.

To define a split payment pattern, follow these steps:

1.       In the Payment Pattern details page, select Split as the Payment Pattern Type. The Create Term Specifications page is displayed.

Figure 4:   Payment Patterns Definitions page

2.      Select the required Pattern Type for each leg.

§        Absolute

§        Relative

3.      Enter the Percent value to indicate the percentage weight of the time line being defined for the individual payment phases (each row). The sum of the percentage weights must total 100%.

4.     Select the Payment Type for each Payment Phase or Split.

5.      Select one of the legs and then select Apply to define pattern details for the leg.

6.     Click Save.

The Split payment pattern is saved and the Payment Pattern summary page is displayed.