02 — Capability · BC-1720.30
Loan Servicing
Keep every booked loan accurate and current, collecting payments, applying interest and fees, holding escrow, reporting to credit bureaus, investors and participants, and closing the loan out at payoff or maturity. Delinquent loans have their own capability.
- Loan Administration
- Loan Operations
- Post-Close Servicing
In scope
- Payment application, interest accrual, rate resets and amortization
- Escrow for taxes and insurance where escrow is held
- Covenant tracking, payoffs, maturity and renewal
- Investor, participant and agent servicing, loan sales and servicing transfers
Out of scope
- Delinquency, loss mitigation and recovery (see BC-1720.50)
- Moving the payment through clearing and settlement rails (see BC-1730.20)
- Initiating payments over batch and instant rails (see BC-1730.10, BC-1730.30)
- The organization's own borrowing covenants (see BC-230.20)
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Decomposes into · 6
- BC-1720.30.10Loan Payment ProcessingBill borrowers, accept scheduled and extra payments in every channel, and apply them to principal, interest and fees in the right order.
- BC-1720.30.20Loan Interest & AmortizationAccrue interest at fixed or variable rates, apply rate resets on schedule, and keep each loan's amortization schedule correct after every event.
- BC-1720.30.30Loan Covenant MonitoringCollect the financial statements and certificates business borrowers owe, test them against their covenants, and escalate breaches.
- BC-1720.30.40Loan Payoff & MaturityQuote exact payoff amounts, process payoffs, renewals and maturities, and close the loan and its documents when it is paid in full.
- BC-1720.30.50Loan Escrow AdministrationWhere escrow is held, collect it with each payment, pay property taxes and insurance when due, and analyze each account yearly to fix shortages and refund surpluses.
- BC-1720.30.60Loan Investor & Agency ServicingReport loan-level activity and remit what is owed to any investors who own the loans and to participants in syndicated loans the bank agents, and sell loans or move servicing to or from another servicer without losing data, payments or borrower protections.