Tenant Set-up

Prior to onboarding of loans, LF will help onboard a Lender as a Tenant, by setting up all necessary configurations on a one-time basis. However, if there are changes at a later date, the tenant will have to come to Lendfoundry for the changes so that Lendfoundry can do a round of testing with the modified configurations. For the Tenant set-up, the following needs to be completed by the LF team:

Environment Set-up

Based on an LF Tenant agreement and subsequent discovery, an environment is set up. This is typically hosted on the cloud or as per preference.

A. Tasks Set-up

There are a series of tasks that the system runs during the EOD/BOD, these are set up for completing the processes associated with the management of loans. These tasks can be configured to run at a specific time of the day(usually during off-peak hours) as per the tenant’s requirements. However, the sequence of tasks matters and hence should be kept in mind while setting up the tasks.

B. Product Parameters Set-up

Each financial product has a standard set of product parameters configured as per Tenant requirements as agreed upon during Discovery. Product parameters are configurations that determine schedule creation, billing dates, payment handling, automated handling of accrual pause/resume, and other such details for all the loans belonging to that product type. Details of all other parameters are available upon request and are discussed at length during the discovery phase. We also can pass certain parameters while onboarding the loan, based on these values schedule creation will happen.

C. Fee Set-Up

Similar to product set-up, we have fee parameters for each of the products. These fees can be configured as per the tenant's requirements and can be applied upon the occurrence of any event, such as delayed payment, on a periodic basis(such as Monitoring Fee), or can be applied manually against any loan via the LMS portal.

D. Payment Hierarchies/Allocation Method

Payment hierarchy allows tenants to set an order of buckets in which to allocate repayments when received from the borrower. Multiple hierarchies can be set up and defined as per Tenant needs.

Types of Hierarchies

We have two types of hierarchies that can be set up:

1. By Bucket
2. By Due Date

“By Bucket” would mean that the payment amount will be split across different buckets (such as Principal, Interest, Late Fee, etc.) in the order with which it is defined in the Hierarchy irrespective of the schedule dates. This order of buckets and the type of hierarchy is determined during the discovery phase. Some of the standard LMS payment hierarchies are as below:

• System: This hierarchy is typically used for recording/initiating an ad-hoc payment(outside of the schedule). This generally has all the buckets. For example, for an interest bearing loan, this contains all the buckets such Schedule Interest, Additional Interest, Schedule Principal, Additional Principal.
• Schedule: This hierarchy is typically used to schedule an ACH manually. Also, the ACH task that creates automated ACH files and processes the payment also uses this hierarchy. As the name suggests, this hierarchy typically contains the Schedule Interest and the Schedule Principal amount.
• Principal Only: Apply all the amount to the Principal.
• Payoff: To pay off the loan by clearing all the outstanding balance.
• Clear Dues: Use this option to get a past due loan back to good standing by clearing up all the arrears/overdue amounts.
• Custom: Use this option to allocate payment in a way that is not captured in any of the options above. Here the user gives the split of the payment amount into different buckets.

“By Due Date” would mean payment amount will be allocated as per the due date. The Interest and Principal split will go in the order of schedule, meaning I1->P1, I2->P2, I3->P3 so on and so forth where I1-P1 is the unpaid interest and principal for the first unpaid schedule. If there is any fee, it will go by the Fee Applied date as reflected in the Transactions. The Fee Applied dates need to be merged with the Payment Schedule dates to get to a final list of due dates. Payment Amount will be allocated as per these merged due dates in the ascending order of dates and for the same date, it will be based on the order defined in the hierarchy.

Calendar Configuration

Calendar configurations are used in automatic payment pulls, defining holidays and therefore desired payment behaviors during such times. Each tenant shares their calendars during the initial set-up. A Calendar can be changed at a later date if there is a change in a holiday.

Rules in LMS

Currently, if a client wants to auto-charge off a loan or auto-close a loan based on certain rules, we can achieve that by configuring some rules in LMS. These rules can be based on DPD, or the number of missed payments, and can also vary for different payment frequencies. This is set up as agreed upon during Discovery.