Loans
Understanding Loan Management in timveroOS
timveroOS provides comprehensive loan servicing capabilities through automated management of active credit products. Once an application is approved and converted to a loan, the system handles all aspects of the loan lifecycle from disbursement through payoff.
Core Loan Concepts
A Loan (technically stored as a Credit entity) represents an active lending product with a borrower. Each loan maintains:
Complete linkage to the originating application and all participants
Current terms including principal amount, interest rate, and payment schedule
Real-time balance tracking across multiple components
Comprehensive transaction history for audit and servicing needs
The system supports various loan types configured for your institution's needs, from simple consumer loans to complex commercial products with custom terms.
How Loan Servicing Works
Automated Payment Processing
When borrowers make payments, the system automatically:
Applies funds according to configured allocation rules
Updates all relevant balances in real-time
Generates transaction records for complete audit trails
Triggers any necessary status changes or notifications
Balance Component Management
The platform tracks multiple balance types within each loan to provide complete visibility:
Principal Balance: The remaining amount borrowed
Interest Balance: Accrued interest awaiting payment
Fee Balances: Various charges like late fees or service fees
Past Due Amounts: Overdue portions tracked separately for collection purposes
This separation enables precise reporting and supports different payment allocation strategies.
Status and Lifecycle Management
Loan status automatically updates based on payment performance and configured rules:
Current loans with on-time payments
Delinquent loans with missed payments
Default status for severely past-due accounts
Paid-off status when fully satisfied
Benefits to Your Operations
Eliminate Manual Servicing Tasks
The automated calculation engine handles all routine servicing activities, freeing staff to focus on customer service and exception handling rather than manual calculations and posting.
Ensure Compliance and Accuracy
Every transaction follows configured rules consistently, maintaining compliance with regulations and internal policies while eliminating human error in payment processing.
Provide Real-Time Visibility
Staff can instantly view current loan status, payment history, and projections, enabling better customer service and informed decision-making.
System Capabilities
Payment Management
Automated payment posting and allocation
Support for various payment methods and channels
Partial payment handling
Overpayment and credit balance management
Account Modifications
Interest rate adjustments
Payment date changes
Term modifications
Forbearance and deferment options
Covenant Monitoring and Compliance
timveroOS provides comprehensive covenant monitoring capabilities that automate the tracking of borrower obligations throughout the loan lifecycle. This systematic approach to covenant management enables financial institutions to maintain portfolio health through early detection of potential issues and structured remediation processes.
Covenants represent the contractual obligations borrowers must maintain to preserve their loan terms. Rather than relying on manual reviews and spreadsheet tracking, the system continuously evaluates these obligations against configured thresholds, providing real-time visibility into compliance status across your entire portfolio.
Core Covenant Tracking Concepts
The platform monitors four distinct categories of covenants, each serving specific risk management purposes:
Financial Covenants track borrower financial health through metrics such as debt service coverage ratios, leverage ratios, liquidity requirements, revenue thresholds, and profitability metrics. These indicators provide early warning of financial stress before it impacts payment performance.
Collateral Covenants ensure the ongoing adequacy of loan security by monitoring loan-to-value ratios, insurance maintenance, property conditions, and valuation requirements. This continuous oversight protects the institution's security position throughout the loan term.
Operational Covenants verify that borrowers maintain agreed-upon business practices, including adherence to business restrictions, management requirements, and operational thresholds that preserve the underwritten risk profile.
Information Covenants enforce transparency requirements through regular reporting submissions, event notifications, compliance certifications, and document updates, ensuring the institution maintains current information for risk assessment.
How Covenant Monitoring Works
The system evaluates each covenant according to its configured schedule and parameters. When metrics cross defined thresholds, the platform automatically detects the breach and updates the covenant status to reflect current compliance:
Clean status indicates all covenant conditions are met
Violation status flags active breaches requiring attention
Exception status tracks temporarily excused violations
Upon breach detection, the system logs the violation with detailed information about which thresholds were exceeded. The platform maintains comprehensive records of all compliance statuses, creating an audit trail that documents when breaches occur and when they return to compliance.
The platform's anchored value management capability captures baseline metrics at loan origination, enabling relative performance tracking over time. This feature proves particularly valuable for covenants based on maintaining certain levels relative to original underwriting, such as revenue growth targets or collateral value maintenance.
Business Benefits
Proactive Risk Management transforms covenant monitoring from a reactive process to a predictive one. By continuously evaluating compliance, the system identifies deteriorating conditions before they manifest as payment problems, enabling timely intervention and relationship preservation.
Reduced Manual Monitoring eliminates the labor-intensive process of spreadsheet-based covenant tracking. Staff no longer need to manually calculate ratios, check thresholds, or maintain tracking logs—the system handles these tasks automatically while providing exception-based reporting for human review.
Consistent Enforcement ensures uniform application of covenant terms across all loans. Every covenant evaluates according to its defined rules, eliminating the inconsistencies that arise from manual processes and ensuring fair treatment of all borrowers.
Complete Audit Trail maintains comprehensive documentation of all covenant-related activities. From initial configuration through breach detection and resolution, every action is logged with timestamps and user attribution, supporting both internal reviews and regulatory examinations.
System Capabilities for Covenant Management
The platform's covenant monitoring framework provides flexibility to match your institution's specific requirements:
Support for multiple covenant types with customizable thresholds and calculation methods
Flexible monitoring schedules ranging from daily reviews for critical metrics to annual assessments for stable requirements
Integration with the metrics engine enabling complex calculations that combine multiple data points
Automated workflow triggers that initiate appropriate responses based on breach severity and type
Historical tracking that maintains covenant performance over the entire loan lifecycle
Reporting and Analytics
Payment history reports
Aging analysis
Portfolio performance metrics
Individual loan statements
Covenant compliance status reports showing current adherence across loans
Breach history tracking for audit and review purposes
Resolution tracking to monitor how violations are addressed
Trend analysis for covenant performance over time
Integration Features
Core banking system synchronization
Payment processor connections
General ledger posting
Customer portal data feeds
Practical Implementation Patterns
Standard Consumer Loan Pattern
Most consumer loans follow a straightforward servicing pattern:
Loan activates with initial terms from approved application
Monthly payments process automatically on scheduled dates
System calculates and posts interest daily
Late fees apply automatically if payments missed
Status updates reflect current payment performance
Modified Loan Pattern
When borrowers face difficulties, the system supports modifications:
Staff initiates modification workflow
New terms configured (rate, payment, schedule)
System recalculates remaining balances
Modified payment schedule takes effect
Original terms preserved for audit purposes
Complex Security Pattern
For loans with multiple security types:
Primary loan linked to multiple participants (borrower, guarantors)
Collateral assets tracked separately with their providers
System monitors all security elements
Covenant monitoring actively tracks compliance for each security element
System evaluates loan-to-value ratios against configured thresholds automatically
Insurance coverage verification occurs through systematic covenant checks
Automated alerts trigger when collateral covenants approach breach levels
Resolution workflows initiate for any detected violations
Release procedures automated when conditions met
Cross-default provisions enforced automatically
Configuration Framework
Loan Product Setup
Define loan types with specific:
Interest calculation methods (simple, compound, rule of 78s)
Payment allocation rules (principal first, interest first, proportional)
Fee structures and triggers
Status transition rules
Servicing Rules Configuration
Establish operational parameters:
Grace periods for late payments
Delinquency bucket definitions (30, 60, 90+ days)
Charge-off criteria
Statement generation schedules
Account Structure Definition
Configure balance tracking:
Account types for different balance components
Aging rules for past due movement
Interest accrual parameters
Fee assessment logic
Covenant Rules Configuration
Establish comprehensive monitoring parameters that align with your risk management strategy:
Covenant Type Definition: Configure financial, collateral, operational, and information covenants specific to your products
Monitoring Frequencies: Set evaluation schedules from daily to annual based on risk profiles and covenant criticality
Threshold Parameters: Define specific values, ratios, and conditions that constitute compliance
Breach Response Configuration: Establish notification recipients, cure periods, and escalation procedures
Resolution Workflows: Design structured processes for breach remediation and exception handling
Implementation Resources
Through the Admin Panel
Covenants - To automatically track Loans perfomance
Metrics Engine - To setup the data for Covenants monitoring
Through the SDK (Step 1)
For specialized loan servicing requirements:
Credit Management System - Core loan entity handling
Credit Operations Framework - Transaction processing and balance management
Key Considerations
Design Principles
Loans are active products derived from approved applications
All servicing follows configured rules automatically
Complete audit trails maintained for compliance
Flexible framework supports various loan types
Operational Excellence
Reduced manual intervention through automation
Consistent policy application across all loans
Real-time balance accuracy for better decisions
Comprehensive reporting for portfolio management
System Integration
Seamless connection to origination process
Automated data flow from applications
Synchronized updates across all systems
Unified customer view across products
Related Topics
Applications - How loans originate from applications
Product Management - Configuring loan products
Document Management - Loan documentation handling
Notifications - Payment reminders and communications
Status Management - Loan status configuration
Covenant Monitoring - Automated compliance tracking for loan obligations throughout the servicing lifecycle
timveroOS: Automated loan servicing for operational excellence
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