When collateral information is missing from loan account information, PrecisionLender will look to each loan's product type and assume that the collateral type marked as "default" is securing that loan. This means that the Recovery Factor and LTV for that collateral type will be used in the Strategic Value and FTP ROE calculations. Relationship Awareness(RA) Product Defaults can be used to modify the LTV that is used for Strategic Value and FTP ROE calculations.
When the RA Collateral Default box is checked, the indicated LTV will be used rather than the LTV of the default collateral type established on the product for pricing opportunities. This can result in more accurate calculations if an LTV more generally reflective of the age of the portfolio has been assigned for the RA calculations (an older loan will generally have a lower LTV if the loan has amortized and/or its collateral has appreciated).
For Loans that are missing collateral information in the imported data:
- Checking the box "Use RA Default" will add that collateral type to a loan and it will use the set "Default LTV-RA" value in the calculation of Strategic and FTP ROE of the loans.
- This should always be set to the collateral type that most commonly secures that type of loan.
- Ex. a Commercial Real Estate loan would most likely be secured by a Commercial Real Estate collateral type.
- Using RA Defaults is opt-in. If the box is not checked, the Default LTV-Pricing will be used in RA calculations when collateral information is not imported.
- Setting Up Collateral Types
- Release Note: New Product Defaults Available For Relationship Awareness - 2015-06-16