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Setting Up Commercial Loan Products

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In this article we will cover:

  

The Commercial Product Edit Screen

Here is the Commercial Product Edit Screen 

 

Toolbar

Here is the toolbar that you use to edit products

Edit

  • The "Edit" button will allow you to change the settings of the product.

Save

  • After you click the "Edit" button, the "Save" button is how you save any changes you have made to the product.
  • If you leave a relationship without saving, any changes you have made since the last save will be lost.

Print

  • The "Print" button allows you to print off the settings of this product.
  • The "Print" button is not visible while editing.

Close

  • The "Close" button will leave the relationship and take you back to the Administration Section.
  • Make sure that you save your work before closing if you would like to keep the changes you have made.

 

Header

Here is the header at the top of the product edit screen

Name

  • The name at the top of the header will be the name of the product and how it is referenced throughout PrecisionLender.
  • This can be edited to match the name of the product at the financial institution.

 Shortcuts

  • The links below the product name can be used to jump directly to sections on the screen.

 

Tabs (Regions)

 Here are the tabs representing different regions or groups of regions for the product

  • The tabs below the header represent different regions or groups of regions that have different assumption sets for the product.

Product Configurations & Defaults 

General

Here are the product configurations and defaults that that you can change for each product

Product Enabled

  • When checked, this product will be available to lenders for pricing.

Minimum Amount

FFIEC / HMDA Lien Status

  • Not Applicable
  • Secured by a First Lien - 1.5% Spread Limit
  • Secured by a First Lien and Eligible for Small Creditor Exemption - 3.5% Spread Limit
  • Secured by a Junior Lien - 3.5% Spread Limit

Pipeline Use Only

  • Checking this box will enable products of this type to be included in the pipeline and production reporting, but lenders will not have full functionality of the Opportunity screen which precludes the individual pricing of a product that should use rate sheets for pricing purposes.
  • This can be useful if you want to include all product types in your reporting, even those that are bulk-priced.
  • Creating And Using A Pipeline Only Product

Available Regions

  • Regions for which these settings are active are signified with a check next to the region name.
  • Split Out Region
    • Allows you to choose regions to separate from this group of regions so they can have separate assumptions.
  • Collapse Into Region
    • Allows you to collapse this group of regions into another group of regions that you select.
    • Only available if the Full Regionality and Advanced Funding module has been licensed.
Enable Conversion Products

Base Target ROE

Adjusted Target ROE

  • Target ROE that takes into account adjustments made at the product level, typically based on risk ratings


Policies & Defaults

Policies_and_Defaults-_Full.PNG

 

User can specify Expected Life

  • Check this box if you want users to be able to specify an Expected Life shorter than the Maturity of the loan being priced.

 

Default Maturity

  • The maturity that will be originally set when a new loan of this type is created.

Default Fixed Rate Lock

  • The fixed rate lock that will be originally set when a new loan of this type is created.

Maximum Allowed Rate Lock Duration

  • The maximum duration allowed for rate locks for loans of this type.

Default Expected Life

  • The expected life that will be originally set when a new loan of this type is created.
  • This field will only show up if the "User can specify Expected Life" box is checked in the General section.
Allowable Payment Types
  • Amortizing
  • Amortizing / Level Principal
  • Single Pay
  • LOC
  • Letter of Credit
  • Scheduled Draws
  • Scheduled Repays
  • Scheduled Draws and Repays
Default Payment Types
  • The payment type that will be originally set when a new loan of this type is created.

Default Payment Frequency

Payment Frequency Options:

  • Annually
  • At Maturity
  • Monthly
  • Quarterly
  • Semiannually

Default Amortization

  • The amortization that will be originally set when a new loan of this type is created.
Default LOC Utilization
  • The utilization that will be originally set when a new loan of this type is created and the Payment Type is LOC
LOC Expected Renewal Retention
Allowable Rate Types
  • Checking the box will make that rate type available for this product.
  • Available Rate Types
    • Fixed
    • Floating
    • Adjustable
    • Swap
Default Rate Type
  • The rate type that will be originally set when a new loan using this product is created.
Allowable Float Index Families
  • Checked indices will be available for the lender.
  • Options:
    • Treasury
    • Libor
    • Prime
    • Funding Curve
    • Custom Indices
Default Float Index
  • The index that will be originally set when a new loan of this type is created and the rate type is floating.

Allowable Adjustable Index Families

  • Checked indices will be available for the lender.
  • Options:
    • Treasury
    • Libor
    • Prime
    • Funding Curve
    • Custom Indices

Default Adjustable Index

  • The index that will be originally set when a new loan of this type is created and the rate type is adjustable.
Default Fixed Period
  • The fixed period that will be originally set when a new loan of this type is created and the rate type is adjustable.
Default Adjustment Frequency
  • The adjustment frequency that will be originally set when a new loan of this type is created and the rate type is adjustable.
  • Adjustment Frequency
Default Floor
  • The floor that will be originally set when a new of this type is created and the rate type is adjustable or floating.

Allowable Swap Index Families

  • Checked swap indices will be available for the lender.
  • Options:
    • Libor
    • Prime

Default Swap Index

  • The swap index that will be originally set when a new loan of this type is selected and the rate type is swap.

Default Swap Profit

  • The swap profit percentage that will be originally set when a new loan of this type is selected and the rate type is swap.
  • Using Interest Rate Swaps
 

Default Annual Fee

  • The annual fee that will be originally set when a new loan using this product is created.

Origination Percent

  • Percentage of the loan amount or commitment that will be added to the fees when a new loan of this type is created.
  • This is a one-time fee charged at origination.

Origination Dollars

  • Dollar amount that will be added to the fees when a new loan of this type is created.
  • This is a one-time fee charged at origination.

Unused LOC Annual Percent

  • Percentage of the unused amount of commitment that will be added to the fees when a new loan of this type is created and the payment type is LOC.
  • This is an annual fee.

 

Allowable Interest Calculations
  • Checking these boxes will allow that interest calculation to be available for this product.
  • Interest Calculations
    • 30/360
    • 30/365
    • Actual/360
    • Actual/365
    • Actual/Actual
Allowable Tax Exemption Types
  • Checking any box here allows that tax exemption type to be available for this product.
  • Tax Exemption Types
    • Not Tax Exempt
    • Fully Tax Exempt
    • Bank Qualified
    • Non Bank Qualified
Default Interest Calculation
  • The interest calculation that will be originally set when a new loan of this type is created.
Default Tax Exemption
  • The tax exemption that will be originally set when a new loan of this type is created.

Scaling Factor Enabled

Default Scaling Factor

  • The default index scaling factor that will be originally set when a new loan of this type is created and index scaling factor is enabled.

 


Credit Configurations & Assumptions

Here are the credit configurations and assumptions that you can change for each product

Risk Ratings

Collateral Types

Guarantee Types

 

Financial Configurations & Assumptions

 

Administration-Products-FinancialConfigurations_Assumptions.PNG

Capital / Annual Loss

  • Typically the Credit Capital and Annual Loss assumptions are based on the output of the credit migration analysis performed in consultation with PrecisionLender.

Operational & Market Risk Capital Allocation

    • Represents the capital necessary to hold against operational and market risk that exist no matter who your borrower is
    • Entered as a percentage of the loan balance plus a percentage of revenue

Absolute Minimum Capital Allocation

    • Can also be set by Risk Rating within the Risk Ratings area.
    • If set at Product and Risk Rating levels, the maximum of the two minimums will be used in computations by the math engine.
Absolute Minimum Annual Loss
    • Can also be set by Risk Rating within the Risk Ratings area.
    • If set at the Product and Risk Rating levels, the maximum of the two minimums will be used in computations by the math engine.

Allowable Exposure Types (Risk Weight)

Administration-Products-AllowableExposureTypes.PNG

Allowable Exposure Types (Risk Weight)

  • Unspecified Risk Weight (100%)" is the default exposure type for products in PrecisionLender.
  • If you have anything other than 'Unspecified Risk Weight (100%)' selected on a product, users will begin seeing a new section within the Opportunity called "Exposure". Here the user will be able to select the exposure type per loan.
  • If the exposure type is a Foreign type, the user will be allowed to select a country type. The risk weight that is returned per country is based on Basel standards.
  • Note: If a product already has a Minimum Capital Allocation, the minimum would be multiplied by the risk weighting. Minimum Capital Allocation is set in Risk Ratings.

Default Exposure Type

  • The exposure type that will be originally set when a new loan of this type is created.

 

Origination and Servicing Channels

 

Prepayment Options 

Here are the prepayment options that you can set up for each product

Name

  • This is the name of this prepayment option that will be available to the lender.

Prepayment Rate

  • The amount per year, expressed as a percentage, that is anticipated to be repaid on top of the normal amortization.

Target ROE Adjustment

  • This is the amount that the Target ROE will be adjusted if this prepayment option is selected.

Basic Prepayment Options

  • 5-4-3-2-1
  • 3-2-1
  • Yield Maintenance

 

Other

Relationship Awareness Defaults

Here are the Relationship Awareness defaults that you can choose from

Minimum Function Maturity - FTP

  • When a loan is approaching maturity, some values can be overstated or understated due to the short term of the calculations.
  • Any value entered here will override the 1-month default.

Minimum Functional Maturity - Strategic

  • When a loan is approaching maturity, some values can be overstated or understated due to the short term of the calculations.
  • Any value entered here will override the defaults of:
    • 12 months for LOCs and Draws
    • 36 months for Amortizing and Single Pay

Origination Fees

  • This is used to set different origination fee defaults for loans coming through Relationship Awareness than the defaults for loans being priced. If this box is unchecked, RA will use the defaults for loans being priced, configured in the Origination section above.
  • By checking the "Origination Fees" box you can enter a new Relationship Awareness-only default value.

 

History

Here is the history of changes made to the product 

  • The History section at the bottom list all of the dates and times that changes were made to the product.
  • By clicking on a date and time you can see the setting of the product that was saved at that date and time.

 

 

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