PrecisionLender allows you to pick from a selection of Origination and Servicing Channels or input differing or additional costs for these channels within your opportunity. The channels available in the opportunity are configured by your administrators in the Origination Channels and Servicing Channels product's settings, which can be viewed in the Assumptions Screen of your opportunity. These expenses may vary depending on the channel and amount of the loan.
In this Article
Origination Channels
An Origination Channel is the channel through which a loan is originated and are the cost to the bank. These can be actual channels or just reflect relative complexity. Not all loans are originated directly by the bank. Some come in via other channels such as a mortgage broker or a correspondent. The origination expense for a loan may vary depending upon the Origination Channel.
Editing an Origination Channel
To edit an origination channel, select the dropdown field for Origination Channel. In the pop-up that appears, you'll see the following options:
- Channel: This is where you'll select the origination channel for one time origination expenses applicable to your opportunity. The most commonly used Origination Channels are New Business, Conversion (typically for construction-to-perm loans or lines of credit that will term out), and Renewal or MultiFacility (typically for multiple loans for an existing relationship). However, these can vary based on how your administrator(s) configured origination channel assumptions.
- % of Fees: If enabled, this is where you have the option to enter the origination expense as a percentage of the origination fees charged to the borrower. This option should only be utilized if you've selected a channel with zero origination expenses (often named Custom) or if there are additional origination expenses that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
- % of Amount: If enabled, this is where you have the option to enter the origination expense as a percentage of the loan amount. This option should only be utilized if you've selected a channel with zero origination expense (often named Custom) or if there are additional origination expenses that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
- Additional Origination Expense: If enabled, this is where you have the option to enter the one time origination expense a dollar amount. This option should only be utilized if you've selected a channel with zero origination expenses (often named Custom) or if there are additional origination expenses that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
Origination Expense reports as part of Interest Income on the Financial Statement.
Servicing Channels
A Servicing Channel is the channel through which a loan will be serviced and are the cost to the bank. These may be actual channels or they might just reflect relative complexity of the servicing.
Editing a Servicing Channel
To edit a servicing channel, select the dropdown field for Servicing Channel. In the pop-up that appears, you'll see the following options:
- Channel: This is where you'll select the servicing channel for annual servicing costs applicable to your opportunity. The most commonly used Servicing Channels are Standard (typically for new business) and Simple or MultiFacility (typically for multiple loans for an existing relationship). However, these can vary based on how your administrator(s) configured servicing channel assumptions.
- % of Average Balance: If enabled, this is where you have the option to enter the annual servicing cost as a percentage of the average loan balance. This option should only be utilized if you've selected a channel with zero servicing costs (often named Custom) or if there are additional servicing fees that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
- % of Amount: If enabled, this is where you have the option to enter the annual servicing cost as a percentage of the loan amount. This option should only be utilized if you've selected a channel with zero servicing costs (often named Custom) or if there are additional servicing fees that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
- Additional Servicing Expense: If enabled, this is where you have the option to enter the annual servicing cost a dollar amount. This option should only be utilized if you've selected a channel with zero servicing costs (often named Custom) or if there are additional servicing fees that haven't been accounted for in standard cost assumptions. If you're unsure whether you need to include any additional costs, check with your administrator(s).
Servicing Expense reports as part of Non-Interest Expense on the Financial Statement.
Current Origination and Servicing Recommendations
Click here for an appendix that includes our recommendations on Loan Origination and Servicing Expense.