Loans
What is a Loan?
A Loan (technically stored as a Credit entity) represents an active lending product after application approval and disbursement. The Loan entity manages the complete servicing lifecycle including payments, balance tracking, modifications, and covenant monitoring.
Loan Structure
Core Attributes
Loan Terms:
Principal amount
Interest rate (annual percentage)
Term length (months or payments)
Payment frequency (monthly, bi-weekly, weekly)
Start date and maturity date
Balance Components:
Principal balance (remaining borrowed amount)
Interest balance (accrued interest)
Fee balances (late fees, service fees)
Past due amounts (delinquent portions)
Relationships:
Link to originating Application
Link to all Participants (Borrower, Co-borrowers, Guarantors)
Link to Credit Product definition
Link to Collateral (if secured)
Status Information:
Current servicing status (ACTIVE, DELINQUENT, DEFAULT, CLOSED)
Payment performance history
Modification history
Covenant compliance status
Loan Servicing Capabilities
1. Payment Schedule Management
Schedule Types:
Simple interest
Equal installment (annuity)
Custom amortization
Flexible arrangements
Schedule Operations:
Automatic generation at disbursement
Recalculation for modifications
Grace period handling
Payment holiday processing
Prepayment adjustments
2. Payment Processing
Automated Processing:
Payment posting from multiple channels
Waterfall allocation (fees → interest → principal)
Partial payment handling
Overpayment and credit management
Real-time balance updates
Transaction Recording:
Complete payment history
Allocation details per payment
Audit trail for all transactions
3. Status Management
Status Updates:
Automatic based on payment performance
Status types:
ACTIVE: Current with payments
GRACE_PERIOD: Within grace period
DELINQUENT_30/60/90/120: Days past due
DEFAULT: Severe delinquency
RESTRUCTURED: Modified terms
WRITTEN_OFF: Deemed uncollectible
CLOSED: Paid in full
4. Covenant Monitoring
Automated tracking of borrower obligations throughout loan lifecycle.
Covenant Types:
Financial Covenants: Debt service coverage, leverage ratios, liquidity
Collateral Covenants: Loan-to-value ratios, insurance maintenance
Operational Covenants: Business restrictions, management requirements
Information Covenants: Reporting submissions, event notifications
Monitoring Process:
System evaluates covenants per configured schedule
Metrics calculated using Metrics Engine
Thresholds checked against configured values
Status updated: CLEAN, VIOLATION, EXCEPTION
Breach logged with details
Automated alerts triggered
Resolution workflows initiated
Covenant Status:
CLEAN: All conditions met
VIOLATION: Active breach requiring attention
EXCEPTION: Temporarily excused violation
Benefits:
Proactive risk management through early warning
Reduced manual monitoring effort
Consistent enforcement across portfolio
Complete audit trail for compliance
5. Loan Modifications
Modification Types:
Payment holidays (temporary suspension)
Term extensions
Interest rate adjustments
Restructuring with new schedule
Refinancing
Modification Process:
Request submission
Eligibility assessment
Trial period (if applicable)
Permanent implementation
Schedule regeneration
Status update
Loan Servicing Examples
Standard Payment Processing
Payment Received: ACH, wire, card, or cash payment arrives
Loan Identification: System matches payment to Loan account
Allocation: Waterfall rules apply (fees → interest → principal)
Balance Update: All balances updated in real-time
Schedule Adjustment: Remaining schedule recalculated if needed
Confirmation: Receipt generated and sent to borrower
Status Check: Loan status updated if delinquency cured
Payment Holiday Processing
Request: Borrower requests payment holiday
Eligibility: System checks holiday eligibility rules
Approval: Automated approval if criteria met, manual review if needed
Schedule Regeneration: New schedule with holiday period created
Implementation: Schedule updated, interest accrual adjusted
Notification: Borrower receives new schedule
Automation Update: Recurring payment instructions updated
Covenant Breach Handling
Detection: Covenant monitoring identifies threshold breach
Status Update: Covenant status changed to VIOLATION
Logging: Breach details recorded with timestamp
Alert: Automated notification to relationship manager
Workflow Trigger: Breach resolution workflow initiates
Follow-up: Cure period tracking, remediation monitoring
Resolution: Status returns to CLEAN when compliance restored
Loan Configuration
Framework Level (SDK)
Loan entity structure
Balance calculation logic
Payment allocation rules
Schedule generation algorithms
Covenant rules and thresholds
Status definitions and transitions
Admin Panel Level
Loan servicing parameters
Covenant monitoring configuration
Delinquency workflow rules
Modification approval workflows
Reporting dashboards
Integration
Core Banking:
Loan balance synchronization
General ledger posting
Account statement generation
Payment Processors:
ACH processing
Card payment handling
Wire transfer posting
Customer Portal:
Real-time balance display
Payment history access
Self-service payment initiation
Implementation Resources
Through SDK (Development team)
Loan Framework:
Credit Management System - Loan entity and servicing framework
Payment Transactions Framework - Transaction processing
Credit Operations Framework - Schedule and modification logic
Covenant Monitoring System - Automated compliance tracking
Through Admin Panel
Servicing Configuration:
Loan Servicing - Payment processing setup
Covenants - Covenant monitoring configuration
Data Configuration:
Metrics Engine - Covenant calculation setup
Analytics:
BI Dashboard - Portfolio monitoring
Related Topics
Applications - How Loans originate from Applications
Loan Servicing - Servicing process details
Credit Products - Product parameters affecting servicing
Status Management - Loan status tracking
Notifications - Payment reminders and alerts
TimveroOS: Automated loan servicing and portfolio management
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