Overview and Example Use-Cases
When operating lending programs, there are a variety of situations where you need to change the terms of a given loan. The best practices under why and when to do so can vary dramatically. For instance:
- You may have a variable interest rate clause
- You may have a program that allows borrowers to periodically draw additional funds, increasing the principal balance on the new loans
- You may run a loan program with clauses for borrowers to refinance different loans at different times or consolidate loans with different interest rates
- You may have a negotiated agreement with a specific borrower to reduce the interest rate on a loan or extend its duration.
Loan Restructuring Capabilities
Depending on your borrower agreement, you may have issued a new loan agreement, or you may need to make a modification that occurs within the structural parameters of your existing borrower agreement.
Canopy’s Loan Restructuring feature allows you to:
- Modify a loan while preserving all of a borrower’s account information (instead of closing the account and opening a new one)
- Maintain a full audit trail of all changes to the loan
- Meet the intimate and use-case-specific needs of your borrowers with post-origination loan modifications that are applied per the unique needs of your lending program
Any parameter that is set at the time of loan creation can be modified when refinancing a loan — you can change origination. This includes:
- Interest policies for the loan
- Fee policies for the loan
- Loan term
- A new ID to reference the refinanced loan (note: the overall account ID will not change)
Scheduling the loan modification
Optionally, you can set a time for the restructuring via the
effective_atparameter. If none is provided, the refinancing will occur immediately upon your request.
You may restructure a loan unlimited times — this means you can structure unique lending programs with high-frequency refinances based on fluctuating needs from your borrowers.
Developers: Check out our API Reference to see how to make Loan Modification requests to Canopy.
Below is a guided demo of how Loan Restructuring is displayed within Accounts inside of CanopyOS.