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Loan

Lifecycle Overview

PENDING: The loan data has been entered into the system but is not ready to be used for managing the related loans.

ACTIVE: The loan data is actively being used to support the associated loans. Loans that are in this status are processed with the majority of actions supported by the system.

CLOSED: The loan data describes loans that have reached their terminal state and will no longer be supported by the system. For example, loans that have been paid off by the borrower.

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Active Loan Statuses

Generally, active loan data can be in one of 5 loan statuses and while in each status, specific transactions can be initiated on a loan, either manually by a service rep or automatically by the system. For instance, when a loan is CURRENT, a service rep can record a payment from a borrower. Some transactions involve initiation of ‘modules’ that are associated with the loan and represent processes with life cycles of their own. Once such module is “Short Sale” module that tracks the progress of a short sale of the property. Subsequent sections document the possible transactions and these ‘modules’ in detail.

CURRENT

The borrower is paying the loan and there are no special processing required. The loan may be unpaid but the borrower is less than one month late on the payment. The loan will remain in current status until it moves to DELINQUENT status or until the principal is completely paid at which time the loan will be changed to CLOSED data status.

DELINQUENT

The loan payment due and late fees have been unpaid for greater than month and less than two months. Once the loan is in DELINQUENT status the borrower may cure the situation and bring the loan back to CURRENT status by paying the outstanding payments and late fees.

DEFAULT

The loan payment due and late fees have been unpaid for greater than two months. Once the loan is in DEFAULT status the borrower may cure the situation and bring the loan back to CURRENT status by paying the outstanding payments and late fees. If this is not done, there are several other options that are available to the borrower to cure the default

  • Repayment Plan - A repayment plan is a plan in which payments may be decreased for a specific amount of time and then increased to bring the account current. Once a repayment plan is created, the loan is set to CURRENT status and extra payments are applied to the late amount as part of the borrower payment transaction.
  • Modification – A modification is when the loan terms are changed to better meet the customers’ needs. T his is done with a Modification transaction that will change the due date, principal and then restart the amortization using the new parameters. The loan is set to CURRENT status.
  • Partial Claim (If the loan is insured) – A partial claim is when funds are received from the Insurer of the Note to bring the account current. A transaction is run to note that a request has been sent to the insurance company awaiting their response. This transaction sets the status of the loan to “LOSS MITIGATION” and the clock continues in that status.
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LOSS MITGATION

If the borrower is unable to bring the loan current or initiate a cure process by the first day of the fourth month of the due date, the loan is moved to LOSS MITIGATION status where one of the following processes are started against the loan:

  1. Short Sale where the associated property is sold at a price where the proceeds from selling the property will fall short of the balance of outstanding principal of the loan. If this process fails, the loan is set to “FORECLOSURE” status and a foreclosure module is initiated.
  2. Deed-in-Lieu of Foreclosure where the associated property is given back to the lender without foreclosure. This is done by the borrower signing the title over to the bank, and no longer owning the home. If this process fails, the loan is set to “FORECLOSURE” status and a foreclosure module is initiated.

If one of these processes are started on the loan, then it will continue until completion at which time the loan will be changed to CLOSED data status. If the borrower cannot agree to a Loss Mitigation option, it is then referred to the foreclosure department by the 120th day of delinquency.

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FORECLOSURE

The Foreclosure process includes many steps that will end in the property being owned by the lender. This process will continue until completion at which time the loan will be changed to CLOSED data status.

REO

After foreclosure is completed, the loan is set to REO state which signifies that the bank owns the property.

Loan Transactions

The following sections list the transactions that can be initiated on a loan, either manually by a service rep or automatically by the system. The transactions are grouped by the loan status for more clarity.

Module Lifecycles

Modules are associated with a loan to record the progress of various processes associated with the loan. Most loans will not have these processes applied so therefore will not have to record the information associated with these modules. Each module has a similar lifecycle:

  1. The module is initiated by a service rep entering the required initial data.
  2. There are rules on when a module may be initiated for a loan.
  3. There are transactions that can be performed on a module by a service rep.
  4. There are automated checks that the system will perform on modules to flag various things like missed dates.

Supporting Subsystems

The system will have the ability to generate form letters to be sent to borrowers at various stages in the loan life cycle. The system will support letter templates that are identified by template ID’s and are used to generate these letters. Generating a letter requires a template and a loan.

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