1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Amortization Term (AMRT_TERM)
  5. Module Usage

8.2.11.2 Module Usage

AMRT_TERM is used by Oracle ALM and Funds Transfer Pricing for adjust-able-rate cash flow transfer-priced records.

Amortization Term

Amortization term has two main purposes:

  • Identifies whether a record is a balloon and is used in the calculation of payment amounts.
  • Used when recalculating payment amounts for User-Defined Payment Pattern records that are defined as % Current Payment and have more than one payment frequency defined in the Payment Pattern user interface.

Balloon Check

As an initial step before processing a record's cash flows, the Cash Flow Engine compares the record's ORG_TERM with its AMRT_TERM. If AMRT_TERM = ORG_TERM. The Cash Flow Engine then uses the CUR_PAYMENT from the record. When appropriate, the Cash Flow Engine later recalculates the CUR_PAYMENT if 1) The record reprices; 2) The TEASER_END_ DATE is reached, or 3) A negative amortization-related recalculation date is reached.

If the AMRT_TERM > ORG_TERM, the cash flow engine recognizes the record as a balloon and recalculates the payment amount. To perform this calculation, the Cash Flow Engine must derive the remaining number of payments until the end of the amortization term. This is calculated by adding the AMRT_TERM to the ORIGINATION_DATE to determine the Amortization End Date. The remaining number of payments is calculated by determining how many payments can be made from and including the NEXT_PAYMENT_DATE and this date. Following is the formula used for determining the remaining number of payments:

(((ORIGINATION_DATE - Beginning of Payment Period Date) / 30.41667 + AMRT_TERM) / PMT_FREQ)

Beginning of Payment Period Date refers to the date of the current payment that the Cash Flow Engine is calculating. This would equal the detail record's NEXT_PAYMENT DATE if the engine were calculating the first Forecasted Cash Flow. After the remaining number of payments have been calculated, the Cash Flow Engine derives the CUR_PAYMENT amount and applies it to the record's Cash Flows. Ignoring repricings and other recalculation events, this payment amount is paid until maturity, at which time the cash flow engine pays the record's balloon payment (the remaining principal portion).

User-Defined Pattern

Records that are defined as % Current Payment in the User-Defined Payment Pattern screen and have more than one payment frequency defined in the Payment Pattern user interface also recalculate the payment amount using the earlier formula.

The remaining number of payments on pattern records is calculated by rounding to the nearest number of payments when the remaining term is not exactly divisible by the payment frequency.