FINERACT-2148: Backdated Charge-off with interest recalculation

fineract-e2e-tests-runner/src/test/resources/features/LoanChargeOff.feature

@@ -1578,3 +1578,36 @@ Feature: Charge-off
       | ASSET   | 112601       | Loans Receivable           | 650.0 |        |
       | EXPENSE | 744037       | Credit Loss/Bad Debt-Fraud |       | 650.0  |
 
+  @TestRailId:C3326 @AdvancedPaymentAllocation
+  Scenario: Verify the repayment schedule is updated before the Charge-off in case of interest recalculation = true
+    When Admin sets the business date to "01 January 2024"
+    When Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                                                     | submitted on date | with Principal | ANNUAL interest rate % | interest type           | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALCULATION_DAILY_TILL_PRECLOSE_PMT_ALLOC_1  | 01 January 2024   | 1000           | 7                      | DECLINING_BALANCE       | DAILY                       | EQUAL_INSTALLMENTS | 3                 | MONTHS                | 1              | MONTHS                 | 3                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "01 January 2024" with "1000" amount and expected disbursement date on "01 January 2024"
+    When Admin successfully disburse the loan on "01 January 2024" with "1000" EUR transaction amount
+    When Admin runs inline COB job for Loan
+    Then Loan Repayment schedule has 3 periods, with the following data for periods:
+      | Nr | Days | Date             | Paid date       | Balance of loan | Principal due | Interest | Fees | Penalties | Due    | Paid  | In advance | Late  | Outstanding |
+      |    |      | 01 January 2024  |                 | 1000.0          |               |          | 0.0  |           | 0.0    | 0.0   |            |       |             |
+      | 1  | 31   | 01 February 2024 |                 | 668.6           | 331.4         | 5.83     | 0.0  | 0.0       | 337.23 | 0.0   | 0.0        | 0.0   | 337.23      |
+      | 2  | 29   | 01 March 2024    |                 | 335.27          | 333.33        | 3.9      | 0.0  | 0.0       | 337.23 | 0.0   | 0.0        | 0.0   | 337.23      |
+      | 3  | 31   | 01 April 2024    |                 | 0.0             | 335.27        | 1.96     | 0.0  | 0.0       | 337.23 | 0.0   | 0.0        | 0.0   | 337.23      |
+    Then Loan Repayment schedule has the following data in Total row:
+      | Principal due | Interest | Fees | Penalties | Due     | Paid | In advance | Late | Outstanding |
+      | 1000          | 11.69    | 0    | 0         | 1011.69 | 0    | 0          | 0    | 1011.69     |
+    When Admin sets the business date to "15 February 2024"
+    When Admin runs inline COB job for Loan
+    # Move the current date into the middle of the 2nd period, so 1st period is past due
+    When Admin sets the business date to "15 August 2024"
+    And Admin does charge-off the loan on "09 February 2024"
+    Then Loan Repayment schedule has 3 periods, with the following data for periods:
+      | Nr | Days | Date             | Paid date       | Balance of loan | Principal due | Interest | Fees | Penalties | Due    | Paid  | In advance | Late  | Outstanding |
+      |    |      | 01 January 2024  |                 | 1000.0          |               |          | 0.0  |           | 0.0    | 0.0   |            |       |             |
+      | 1  | 31   | 01 February 2024 |                 | 668.6           | 331.4         | 5.83     | 0.0  | 0.0       | 337.23 | 0.0   | 0.0        | 0.0   | 337.23      |
+      | 2  | 29   | 01 March 2024    |                 | 335.8           | 332.8         | 4.43     | 0.0  | 0.0       | 337.23 | 0.0   | 0.0        | 0.0   | 337.23      |
+      | 3  | 31   | 01 April 2024    |                 | 0.0             | 335.8         | 1.96     | 0.0  | 0.0       | 337.76 | 0.0   | 0.0        | 0.0   | 337.76      |
+    Then Loan Repayment schedule has the following data in Total row:
+      | Principal due | Interest | Fees | Penalties | Due     | Paid | In advance | Late | Outstanding |
+      | 1000          | 12.22    | 0    | 0         | 1012.22 | 0    | 0          | 0    | 1012.22     |

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java

@@ -1187,7 +1187,7 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom<Long> {
         doPostLoanTransactionChecks(getLastUserTransactionDate(), loanLifecycleStateMachine);
     }
 
-    public boolean isInterestRecalculationEnabledForProduct() {
+    private boolean isInterestRecalculationEnabledForProduct() {
         return this.loanProduct.isInterestRecalculationEnabled();
     }
 
@@ -2647,6 +2647,10 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom<Long> {
         return BigDecimal.ZERO.compareTo(getLoanRepaymentScheduleDetail().getAnnualNominalInterestRate()) < 0;
     }
 
+    public boolean isInterestRecalculationEnabled() {
+        return this.loanRepaymentScheduleDetail.isInterestRecalculationEnabled();
+    }
+
     public LocalDate getMaturityDate() {
         return this.actualMaturityDate;
     }

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java

@@ -281,6 +281,10 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
 
     @Override
     public void processLatestTransaction(LoanTransaction loanTransaction, TransactionCtx ctx) {
+        // If we are behind, we might need to first recalculate interest
+        if (ctx instanceof ProgressiveTransactionCtx progressiveTransactionCtx) {
+            recalculateInterestForDate(loanTransaction.getTransactionDate(), progressiveTransactionCtx);
+        }
         switch (loanTransaction.getTypeOf()) {
             case DISBURSEMENT -> handleDisbursement(loanTransaction, ctx);
             case WRITEOFF -> handleWriteOff(loanTransaction, ctx);
@@ -963,40 +967,44 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
     }
 
     private void recalculateInterestForDate(LocalDate targetDate, ProgressiveTransactionCtx ctx) {
-        if (ctx.getInstallments() != null && !ctx.getInstallments().isEmpty()
-                && ctx.getInstallments().get(0).getLoan().getLoanProductRelatedDetail().isInterestRecalculationEnabled()
-                && !ctx.getInstallments().get(0).getLoan().isNpa() && !ctx.getInstallments().get(0).getLoan().isChargedOff()) {
-            List<LoanRepaymentScheduleInstallment> overdueInstallmentsSortedByInstallmentNumber = findOverdueInstallmentsBeforeDateSortedByInstallmentNumber(
-                    targetDate, ctx);
-            if (!overdueInstallmentsSortedByInstallmentNumber.isEmpty()) {
-                List<LoanRepaymentScheduleInstallment> normalInstallments = ctx.getInstallments().stream() //
-                        .filter(installment -> !installment.isAdditional() && !installment.isDownPayment()).toList();
+        if (ctx.getInstallments() != null && !ctx.getInstallments().isEmpty()) {
+            Loan loan = ctx.getInstallments().get(0).getLoan();
+            if (loan.isInterestRecalculationEnabled() && !loan.isNpa()
+                    && (!loan.isChargedOff() || !DateUtils.isAfter(targetDate, loan.getChargedOffOnDate()))) {
 
-                Optional<LoanRepaymentScheduleInstallment> currentInstallmentOptional = normalInstallments.stream().filter(
-                        installment -> installment.getFromDate().isBefore(targetDate) && !installment.getDueDate().isBefore(targetDate))
-                        .findAny();
+                List<LoanRepaymentScheduleInstallment> overdueInstallmentsSortedByInstallmentNumber = findOverdueInstallmentsBeforeDateSortedByInstallmentNumber(
+                        targetDate, ctx);
+                if (!overdueInstallmentsSortedByInstallmentNumber.isEmpty()) {
+                    List<LoanRepaymentScheduleInstallment> normalInstallments = ctx.getInstallments().stream() //
+                            .filter(installment -> !installment.isAdditional() && !installment.isDownPayment()).toList();
 
-                // get DUE installment or last installment
-                LoanRepaymentScheduleInstallment lastInstallment = normalInstallments.stream()
-                        .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).get();
-                LoanRepaymentScheduleInstallment currentInstallment = currentInstallmentOptional.orElse(lastInstallment);
+                    Optional<LoanRepaymentScheduleInstallment> currentInstallmentOptional = normalInstallments.stream().filter(
+                            installment -> installment.getFromDate().isBefore(targetDate) && !installment.getDueDate().isBefore(targetDate))
+                            .findAny();
 
-                Money overDuePrincipal = Money.zero(ctx.getCurrency());
-                Money aggregatedOverDuePrincipal = Money.zero(ctx.getCurrency());
-                for (LoanRepaymentScheduleInstallment processingInstallment : overdueInstallmentsSortedByInstallmentNumber) {
-                    // add and subtract outstanding principal
-                    if (!overDuePrincipal.isZero()) {
-                        adjustOverduePrincipalForInstallment(targetDate, processingInstallment, overDuePrincipal,
-                                aggregatedOverDuePrincipal, ctx);
+                    // get DUE installment or last installment
+                    LoanRepaymentScheduleInstallment lastInstallment = normalInstallments.stream()
+                            .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).get();
+                    LoanRepaymentScheduleInstallment currentInstallment = currentInstallmentOptional.orElse(lastInstallment);
+
+                    Money overDuePrincipal = Money.zero(ctx.getCurrency());
+                    Money aggregatedOverDuePrincipal = Money.zero(ctx.getCurrency());
+                    for (LoanRepaymentScheduleInstallment processingInstallment : overdueInstallmentsSortedByInstallmentNumber) {
+                        // add and subtract outstanding principal
+                        if (!overDuePrincipal.isZero()) {
+                            adjustOverduePrincipalForInstallment(targetDate, processingInstallment, overDuePrincipal,
+                                    aggregatedOverDuePrincipal, ctx);
+                        }
+
+                        overDuePrincipal = processingInstallment.getPrincipalOutstanding(ctx.getCurrency());
+                        aggregatedOverDuePrincipal = aggregatedOverDuePrincipal.add(overDuePrincipal);
                     }
 
-                    overDuePrincipal = processingInstallment.getPrincipalOutstanding(ctx.getCurrency());
-                    aggregatedOverDuePrincipal = aggregatedOverDuePrincipal.add(overDuePrincipal);
-                }
-
-                boolean adjustNeeded = !currentInstallment.equals(lastInstallment) || !lastInstallment.isOverdueOn(targetDate);
-                if (adjustNeeded) {
-                    adjustOverduePrincipalForInstallment(targetDate, currentInstallment, overDuePrincipal, aggregatedOverDuePrincipal, ctx);
+                    boolean adjustNeeded = !currentInstallment.equals(lastInstallment) || !lastInstallment.isOverdueOn(targetDate);
+                    if (adjustNeeded) {
+                        adjustOverduePrincipalForInstallment(targetDate, currentInstallment, overDuePrincipal, aggregatedOverDuePrincipal,
+                                ctx);
+                    }
                 }
             }
         }
@@ -1071,9 +1079,6 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
     }
 
     private void handleRepayment(LoanTransaction loanTransaction, TransactionCtx transactionCtx) {
-        if (transactionCtx instanceof ProgressiveTransactionCtx) {
-            recalculateInterestForDate(loanTransaction.getTransactionDate(), (ProgressiveTransactionCtx) transactionCtx);
-        }
         if (loanTransaction.isRepaymentLikeType() || loanTransaction.isInterestWaiver() || loanTransaction.isRecoveryRepayment()) {
             loanTransaction.resetDerivedComponents();
         }

fineract-provider/src/main/java/org/apache/fineract/cob/loan/LoanInterestRecalculationCOBBusinessStep.java

@@ -36,7 +36,7 @@ public class LoanInterestRecalculationCOBBusinessStep implements LoanCOBBusiness
     @Override
     public Loan execute(Loan loan) {
         if (!loan.isInterestBearing() || !loan.getStatus().isActive() || loan.isNpa() || loan.isChargedOff()
-                || !loan.isInterestRecalculationEnabledForProduct()
+                || !loan.isInterestRecalculationEnabled()
                 || loan.getLoanInterestRecalculationDetails().disallowInterestCalculationOnPastDue()) {
             log.debug(
                     "Skip processing loan interest recalculation [{}] - Possible reasons: Loan is not an interest bearing loan, Loan is not active, Interest recalculation on past due is disabled on this loan",

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/serialization/LoanForeclosureValidator.java

@@ -28,7 +28,7 @@ import org.springframework.stereotype.Component;
 public final class LoanForeclosureValidator {
 
     public void validateForForeclosure(final Loan loan, final LocalDate transactionDate) {
-        if (loan.isInterestRecalculationEnabledForProduct()) {
+        if (loan.isInterestRecalculationEnabled()) {
             final String defaultUserMessage = "The loan with interest recalculation enabled cannot be foreclosed.";
             throw new LoanForeclosureException("loan.with.interest.recalculation.enabled.cannot.be.foreclosured", defaultUserMessage,
                     loan.getId());

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java

@@ -3261,8 +3261,26 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
         final List<Long> existingReversedTransactionIds = loan.findExistingReversedTransactionIds();
 
         LoanTransaction chargeOffTransaction = LoanTransaction.chargeOff(loan, transactionDate, txnExternalId);
+
+        if (loan.isInterestBearing() && loan.isInterestRecalculationEnabled()
+                && DateUtils.isBefore(loan.getInterestRecalculatedOn(), DateUtils.getBusinessLocalDate())) {
+            final ScheduleGeneratorDTO scheduleGeneratorDTO = this.loanUtilService.buildScheduleGeneratorDTO(loan, null, null);
+            loanScheduleService.regenerateRepaymentScheduleWithInterestRecalculation(loan, scheduleGeneratorDTO);
+            loan.addLoanTransaction(chargeOffTransaction);
+            ChangedTransactionDetail changedTransactionDetail = loan.reprocessTransactions();
+            if (changedTransactionDetail != null) {
+                for (final Map.Entry<Long, LoanTransaction> mapEntry : changedTransactionDetail.getNewTransactionMappings().entrySet()) {
+                    loanAccountDomainService.saveLoanTransactionWithDataIntegrityViolationChecks(mapEntry.getValue());
+                    accountTransfersWritePlatformService.updateLoanTransaction(mapEntry.getKey(), mapEntry.getValue());
+                }
+                // Trigger transaction replayed event
+                replayedTransactionBusinessEventService.raiseTransactionReplayedEvents(changedTransactionDetail);
+            }
+        } else {
+            loan.addLoanTransaction(chargeOffTransaction);
+        }
         loanTransactionRepository.saveAndFlush(chargeOffTransaction);
-        loan.addLoanTransaction(chargeOffTransaction);
+
         saveAndFlushLoanWithDataIntegrityViolationChecks(loan);
 
         String noteText = command.stringValueOfParameterNamed(LoanApiConstants.noteParameterName);

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/ProgressiveLoanSummaryDataProvider.java

@@ -23,6 +23,7 @@ import java.time.LocalDate;
 import java.util.Collection;
 import java.util.List;
 import lombok.AllArgsConstructor;
+import lombok.extern.slf4j.Slf4j;
 import org.apache.commons.lang3.tuple.Pair;
 import org.apache.fineract.organisation.monetary.data.CurrencyData;
 import org.apache.fineract.portfolio.loanaccount.data.LoanSummaryData;
@@ -42,6 +43,7 @@ import org.springframework.stereotype.Component;
 
 @Component
 @AllArgsConstructor
+@Slf4j
 public class ProgressiveLoanSummaryDataProvider extends CommonLoanSummaryDataProvider {
 
     private final AdvancedPaymentScheduleTransactionProcessor advancedPaymentScheduleTransactionProcessor;
@@ -89,7 +91,10 @@ public class ProgressiveLoanSummaryDataProvider extends CommonLoanSummaryDataPro
             ProgressiveLoanInterestScheduleModel model = changedTransactionDetailProgressiveLoanInterestScheduleModelPair.getRight();
             if (!changedTransactionDetailProgressiveLoanInterestScheduleModelPair.getLeft().getCurrentTransactionToOldId().isEmpty()
                     || !changedTransactionDetailProgressiveLoanInterestScheduleModelPair.getLeft().getNewTransactionMappings().isEmpty()) {
-                throw new RuntimeException("Transactions should not be reverse replayed!");
+                List<Long> replayedTransactions = changedTransactionDetailProgressiveLoanInterestScheduleModelPair.getLeft()
+                        .getNewTransactionMappings().keySet().stream().toList();
+                log.warn("Reprocessed transactions show differences: There are unsaved changes of the following transactions: {}",
+                        replayedTransactions);
             }
             if (model != null) {
                 PeriodDueDetails dueAmounts = emiCalculator.getDueAmounts(model, loanRepaymentScheduleInstallment.getDueDate(),