Bharath Gowda created FINERACT-2311:
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Summary: Buy-Down fees
Key: FINERACT-2311
URL: https://issues.apache.org/jira/browse/FINERACT-2311
Project: Apache Fineract
Issue Type: New Feature
Reporter: Bharath Gowda
h3. Background and Details
There is a need to support an amortization schedule for 0% interest “buy down”
loans where a merchant fee is collected and amortized into interest income over
the life the loan. This amortized fee is NOT visible to the customer. This fee
balance is posted to a deferred income account on the loan and would follow the
daily amortization schedule as defined by the system.
h3. Requirement Details
# Buy-down fees will be added at the time of Disbursement through API
# Buy-down fees can be added from the UI as well
# Buy-down fees, is a unique transaction type that will be used to post the
buy down fee to the loan account
# Buy-down fees amount will not have any impact on the Schedule calculation or
Interest calculation
# Buy-down fees amount can either be a Interest or Fees Income
# Buy-down fees will have daily amortization (similar to Capitalized Income)
to amortize the deferred income.
## Equal amortization
## Formula based amortization
## Will need to accelerate the remaining balance of the deferred income on an
early payoff.
## Will need to charge off any balance in deferred income when a loan balance
is charged off.
## System should maintain a current deferred fee balance at the loan level
# There is no impact or visibility to the customer for the amortization of the
fee or daily recognition of the income.
# Buy-down fee adjustment transaction type
## Can be added to loan account through API/UI
## it adjusts/credits the deferred Income.
## Adjustment transaction will not have any Impact on loan balance
Accounting Entries and UCs are below
[https://docs.google.com/spreadsheets/d/1qjJj-Yl6UOiiEMNnKufltDT8aNdYjxLB6DtSRsue910/edit?usp=sharing]
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