Loan Origination

Loan Origination 179

Introduction
The consumer lending function can be broadly divided into two stages:

 Loan origination or application processing stage, followed by

 Loan account processing

The loan origination or application processing stage can be further classified into:

 Application Entry and

 Underwriting

This chapter deals with the activities involved in application entry.

Application Entry
Loan origination or application processing is the first stage of loan processing
wherein your bank receives the loan application from the applicant(s). In this
stage, you can capture all financial and non-financial information related to the
applicant. You can also capture details of multiple co-borrowers/co-applicants.

In addition, the system further allows you to input details of multiple securities
for a single application.

Example

For an amortized home loan, the applicant will be giving you the self-occupied
premises apart from the one to be purchased, as part of the security. The application
entry for such a loan will capture the following details:

 Primary and secondary applicants’ financial and non-financial details

 Loan request details
 Underlying collateral details (home or other assets backing the loan)

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During loan application, you can capture the following details of the applicant
along with loan details:

 Personal details of applicants

 Professional Details
 Residence Details
 Financial Health
 Asset Information
 Loan structure

FLEXCUBE allows you to capture all the aforementioned information in the Loan
Application Entry screen. To invoke the screen, click on Retail Lending in the
Application Browser and select Application Entry.

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Features of the Loan Application Entry screen

This screen has three sections. In the topmost section you can capture the loan
application details. In the second and third sections, you can capture details
about the applicant(s).

The second section comprises seven tabs corresponding to different functions.

They are as follows:

Tab Function

Primary Applicant Allows you to capture details of the primary applicant.

Other Applicants Allows you to capture details of the co-applicant or other

applicants in case it is a joint application.

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Loan Allows you to capture loan request details.

Vehicle Allows you to capture information related to the vehicle.

Home Allows you to capture necessary details relating to the

address of the property and other title details.

Other Any loan product not falling under the above is classified
under this tab. It could be lending against other collaterals.

Edits This tab displays the results of the edits (validations) run as
part of the application processing activity. The processing is
triggered when the ‘Next Application’ button is clicked).

The third section comprises several tabs to capture additional information about
the applicants and loans. Whenever a certain tab is clicked in the second section,
its corresponding tabs are enabled in the third section.

Section 1

Capturing Loan Application details

This section will have the following fields:

No Image

You have to check this box and then enter the application details. FLEXCUBE
does not support image capture for applications.

Branch

Specify the branch code of your bank in this field. Press F9 to view the list of
branch codes linked to the look-up, in the adjoining field.

This is not a mandatory field.

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Application number

In this field, the system will generate a unique application number for every
application.

Date

This field will capture the application date. It cannot be less than the system date.
This means that the application entry cannot be back-dated. This is a mandatory
field.

Priority

You can indicate the priority of the application in this field. It can be

 High
 Normal
 Low

You can select the value from the list linked to a look-up. Press F9 to view the list.
This is not a mandatory field.

Joint

Here you can check or uncheck the option to indicate whether the application is a
joint application or not. This is not a mandatory field.

Cosigned

You can check this option to indicate whether the application is cosigned or not.
This is not a mandatory field.

Product

The product category maintained in FLEXCUBE is displayed in this field. Certain

fields of this screen will be enabled or disabled depending upon the product
displayed.

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Example

If an applicant opts for a home loan, ‘Vehicle’ and ‘Other’ tabs will be disabled.

This is not a mandatory field.

Underwriter

Once a product is chosen, the system displays the corresponding underwriter’s name
in this field. This is an optional field and no value will be defaulted here.

Purpose

Specify the purpose of the loan in this field.

This is not a mandatory field.

Contact

Specify the contact of the source of the application. This is relevant for indirect
lending where there is a mediating body between the loan seeker and the
funding institution.

This is not a mandatory field.

Channel

Select how the application was received; for example, fax, web entry, or phone.

Producer

The system will display name of the person who is capturing the application
details as the person who actually produces the application.

The tab processes the current application and allows you to enter
the next application. It is clicked after all the information for a certain application is
entered.

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Sections 2 and 3

Capturing Primary Applicant details

You can capture the following details for the primary applicant:

First name

Enter the applicant’s first name in this field. This is a mandatory field.

Middle Initial

Enter the applicant’s middle initial name here. This is however not mandatory.

Last Name

Enter the applicant’s last name here. This is a mandatory field.

Suffix

Enter the applicant’s suffix or generation in this field. You can select the value
from the list linked to a look-up. Press F9 to view the list.

This is however not a mandatory field.

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ID Type

The various types of unique IDs maintained will be displayed here on pressing
F9. Select the relevant type.

Unique ID

Specify the applicant’s unique ID such as passport number, in this field. This is a
mandatory field.

Birth Date

Enter the applicant’s date of birth in this field. This is a mandatory field.

Gender

Specify the applicant’s gender in this field. This is not a mandatory field.

Language

Select the applicant’s native language from the list linked to a look-up. Press F9 to
view the list. This is a mandatory field.

License

Enter the applicant’s license number in this field. This is not a mandatory field.

License State

Enter the state where the applicant’s license has been issued.

Email

Input the applicant’s email address in this field. This is not a mandatory field.

Class

Select the class to which the applicant belongs, to indicate whether the applicant
is an employee of your bank or an outsider. If he is an employee, the conditions
of the loan could be different from those for a normal applicant. Press F9 to view
the list of class types.

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This is a mandatory field.

Marital Status

Indicate the applicant’s marital status in this field. This is not a mandatory field.

Dependents

Specify the number of dependents on the applicant. This is not a mandatory field.

Mother’s Maiden Name

Enter the applicant’s mother’s maiden name in this field. This is not a mandatory
field.

Race National Origin

Select the applicant’s race or national origin from the maintained list. Press F9 to
view the list. This is not a mandatory field.

Disability

Indicate whether the applicant has any kind of disability.

Prior Bankruptcy

Specify whether the applicant has any record of prior bankruptcy.

Bankruptcy Discharge Date

Enter the discharge date of prior bankruptcy, in this field.

ECOA

Select the Equal Credit Opportunity Act code if applicable. The Act defines the
various possibilities on who is liable; individual, joint, cosigner, and so on. This is
not a mandatory field.

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Capturing details of the Other Applicants

In this screen, you can capture the same details as of the primary applicant, for
the other applicants. However, there is one additional field:

Type

Specify the relationship of the (other) applicant with the primary applicant.

The following tabs will be enabled in the third section of the screen for the
primary and other applicants:

 Address
 Employment
 Telecom
 Financials
 Liabilities
 Other income

Capturing Address details

You can capture the following details:

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Type

Specify the address type in this field. The value could be home, vacation,
workplace, temporary or even relative. An applicant who does not have a
permanent address may give his temporary address or his workplace address.

Postal Type

Select the postal address type if applicable.

Specify the applicant’s building number in this field.

Pre

Select the street prefix (directional) from the list linked to a look-up. Press F9 to
view the list.

Street Name

Enter the street name in this field.

Street Type

Specify the street type from the list linked to a look-up. Press F9 to view the list.

Post

Select the street post fix (directional) from list linked to a look-up. Press F9 to
view the list.

Apartment number

Enter the applicant’s apartment number in this field.

Own/Rent

Specify whether the applicant lives in a rented house or his own house.

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Landlord

Enter the name of the applicant’s landlord in this field.

Phone

Specify the landlord’s phone number in this field.

Years Stated

Enter the number of years that the applicant has been residing in the house.

Months Stated

Specify the number of months that the applicant has been residing at the house.

Currency

Specify the income currency of the applicant. You can select the currency from
the list maintained with the look-up. Press F9 to view the list.

Amt Stated

Specify the amount that the applicant pays as rent, in this field.

Frequency

Indicate the frequency of the applicant’s rent payment. You can select any of the
following values from the list maintained with a look-up:

 Annual
 Monthly
 Weekly

Press F9 to view the list.

Mailing/current

Indicate the nature of the address of the applicant by checking the corresponding
box.

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Address

Specify the first line of the applicant’s address in this field. You can maintain

multiple addresses for an applicant. Click on the ‘New’ button to enter fresh
details.

Address 2

Enter the second line of the applicant’s address in this field.

Zip

Specify the zip code of the applicant’s city.

Zip Extension

Specify the zip extension of the applicant’s city in this field.

City

Specify the applicant’s city in this field.

State

Select the state of the applicant’s residence from the list maintained with the
look-up. Press F9 to view the list.

Country

Select the country code of the applicant’s city from the list maintained with the
look-up. Press F9 to view the list.

Phone App

Enter the applicant’s phone number in this field.

Comment

You can enter any comment in this field.

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Census Tract/BNA Code

Enter census tract/BNA (block numbering area) if applicable.

MSA Code

Enter the Metropolitan Statistical Area (MSA) code if applicable. These are
similar in concept to a zip code, but used mostly on government reports.

Capturing Employment details

You can capture the following details:

Current

Indicate whether the details are of the applicant’s current employment by

checking or unchecking the field.

Type

Select the type of occupation of the applicant from the list maintained with the
look-up. Press F9 to view the list.

Employer

Specify the name of the applicant’s employer in this field.

Address

Specify the building number of the current employment in this field.

Address 1

Specify the first line of the address in this field.

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Address 2

Specify the second line of the address in this field.

City

Specify the city where the applicant works in this field.

State

Select the state where the applicant works from the list maintained with the look-
up. Press F9 to view the list.

Zip

Select the zip code of the employment address from the list maintained with the
look-up. Press F9 to view the list.

Zip extension

Specify the zip code extension in this field.

Country

Select the country code of the applicant’s office from the list maintained with the
look-up. Press F9 to view the list.

Occupation

Select the nature of the applicant’s employment from the list maintained with the
look-up. Press F9 to view the list.

Title

Specify the applicant’s title or designation at work, in this field.

Phone

Enter the applicant’s official phone number in this field.

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Extension

Enter the applicant’s phone extension in this field.

Years

Input the number of years that the applicant has been employed with the current
employer, in this field.

Months

Input the number of months that the applicant has been employed with the
current employer, in this field.

Income

Specify the applicant’s income in this field.

Currency

Select the currency of income from the list maintained with the look-up. Press F9
to view the list.

Frequency

Specify the frequency of income drawn by the applicant, here.

Comment

You can enter any comment in this field.

Capturing Telecom details

You can capture the following details:

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Telecom Type

Select the telecommunication type from the list maintained with the look-up.
Press F9 to view the list.

Phone

Enter the phone number in this field.

Extension

Enter the phone extension in this field.

Current

Indicate whether this telecom number is current by checking the box.

Capturing Financial details

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You need to capture the following details in this screen:

Type

Select the financial type from the list maintained with the look-up. Press F9 to
view the list. The following options are available:

 Liquid assets
 Real estate assets
 Retirement assets

Source

Select the applicant’s source of income from the list maintained with the look-up.
Press F9 to view the list. The following sources are available:

 Stocks
 Rent received

Currency

Select the currency of the liquid assets from the list maintained with the look-up.
Press F9 to view the list.

Amount

Specify the value of the asset in this field. The value cannot be negative.

Comment

You can enter any comment about the applicant’s employment in this field.

Capturing Liabilities details

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You need to capture the following liabilities details:

Type

Select the type of liability from the list maintained with the look-up. Press F9 to
view the list. The following options are available:

 Installment
 Mortgage
 Open

Currency

Specify the currency of the liability in this field. You have to enter a valid
currency.

Amount

Specify the liability amount in this field.

Frequency

Select the frequency of payment of liability from the following values maintained
with the look-up.

 Annual
 Monthly

Press F9 to view the list.

Account Type

Specify the account type corresponding to the liability.

Balance

Specify the account balance of the applicant in this field.

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Comment

You can enter any comment about the applicant’s employment in this field.

Capturing details of Other Income

You can capture the following details in this screen:

Type

Select the income type from the list maintained with the look-up. Press F9 to view
the list.

Currency

Specify the currency of the income.

Amount

Specify the income amount in this field.

Frequency

Select the frequency of drawing the income from the list maintained with the
look-up. Press F9 to view the list.

Capturing Loan details

Your bank can define various loan schemes as products. For each product, you
can also define ‘attributes’, the terms and conditions. The loan acquires the terms
defined for the product that it involves. You, however, can change the inherited
attributes of a loan, while processing, to suit a specific customer requests.

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In this screen you can capture the following details:

Currency

The currency of the loan will be displayed in this field. It will be the same as the
branch currency indicated in the first section under loan application details.

Requested Advance

Specify the requested advance amount in this field.

Payment

Enter the requested repayment amount in this field.

Term

Specify the number of payments for the loan repayment.

Rate

State the rate of interest for the loan in this field.

Down %

Specify the approximate down payment percentage for the loan that the
applicant can pay.

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Down Payment

Enter the approximate down payment amount that the applicant can pay.

Approximate Price

Specify the approximate cash price of the asset for which the loan is sought.

Promotion

Select the requested promotion from list maintained with the look-up. Press F9 to
view the list. The options for current promotion types are:

 No payment, or
 No interest for a number of terms

The following tabs will be enabled in section three for loans:

 Itemizations
 Trade in
 Comments

Itemizations

This implies product-related features in terms of multiple payouts.

Example

Payouts of a loan may be partially made to the customer and the remaining to
another entity.

Trade in

This is primarily used for auto loans and has the facility to capture existing
vehicle details to be traded in along with valuation details. The type and sub-type
are defined at product level and displayed in the form of a lookup.

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Comments

You can lodge any specific comment with respect to a loan request. The same can
be viewed across the processing of the loan cycle.

Promotions

You can use promotions pre-defined and mapped to a product for an applicant.
The same is displayed in the form of a lookup and is user selectable.

Capturing Itemization details

This screen has the following fields:

Itemization

You can view the itemization code in this field.

+/-

The corresponding sign will be displayed in this field.

Requested Amount

Enter the requested amount against each item under itemization.

Comment

You can enter comments relating to the itemization entry.

Example

If a fee is abnormally high or low, this field might be used to record the reason.

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Capturing Trade-in details

You can capture the following details in this screen:

Asset Type

Select the asset class from list maintained with the look-up. Press F9 to view the
list.

Sub Type

Select the asset sub-type from list maintained with the look-up. Press F9 to view
the list.

Year

Enter the year of manufacture of the asset from list maintained with the look-up.
Press F9 to view the list.

Make

Enter the make of the asset in this field.

Model

Enter the model of the asset in this field.

Body

Enter the body type of the asset.

Identification Number

Enter the asset identification number.

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Wholesale

Enter the wholesale value of the asset in this field.

Description

The system displays the asset description in this field.

Valuation Dt

Enter the valuation date for the asset.

Source

Select the valuation source list maintained with the look-up. Press F9 to view the
list.

Supplement

Enter the valuation supplement in this field.

Edition

Enter the valuation edition in this field.

The fields ‘Valuation Dt’, ‘Source’, ‘Supplement’ and ‘Edition’ are related to
the source of the valuation of the asset and are dependent on the type of asset.
The source or agency for valuation may be different for different kinds of loans.

Retail

Enter the retail value.

Add-ons

Enter the value of add-ons on the asset.

Payoff Amt

Enter the payoff amount in this field.

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Total value

The system displays the total value of the asset after adding all the relevant
values.

Capturing Comments details

You can capture the following details in this screen:

Alert

Check the box if the comment is an alert.

If you select the Alert box, the comment appears on the Customer Service
form’s Account Details page in the Comment sub page.

Type

Select the comment type from the list maintained with the look-up. Press F9 to
view the list.

Sub Type

Select the comment sub-type from the list maintained with the look-up. Press F9
to view the list.

Comment

You can enter any comment in this field.

User

In this field, the system displays the user who entered or created the comment.

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Date

The system displays the comment date and time in this field.

Capturing Home details

You can capture the following details:

Primary

Check this box to indicate whether the asset is the primary or main collateral for
the loan.

Class

Select the asset class from the list maintained with the look-up. Press F9 to view
the list. The following options are available:

 New home
 Old home

Type

Select the asset type from the list maintained with the look-up. Press F9 to view
the list.

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Sub-type

Select the asset sub-type from the list maintained with the look-up. Press F9 to
view the list.

Occupancy

Select the owner occupancy type from the list maintained with the look-up. Press
F9 to view the list.

Status

Select the asset status from the list maintained with the look-up. Press F9 to view
the list. The following options are available:

 Not defined
 Active
 In Inventory and
 Inactive

Year

Enter the year when the property was built.

Make

Specify the make of the home in this field, if applicable. It could be the builder or
construction company.

Model

State the model of the home in this field. It could be any specific description of
the home like the number of rooms.

PO#

Enter the assets purchase order number, if applicable.

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Enter the asset width in this field.

Enter the asset length in this field.

Address

Enter the building number in this field.

Address 1

Enter the address line 1 in this field.

Address 2

Enter the address line 2 in this field.

City

Enter the city in this field.

State

Enter the state in this field.

Zip

Select the zip code from the list maintained with the look-up. Press F9 to view the
list.

Zip extension

Enter the zip extension in this field.

County

Select the county from the list maintained with the look-up. Press F9 to view the
list.

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Country

Select the country from the list maintained with the look-up. Press F9 to view the
list.

ID#

Specify the title details as identification number.

GEO

Enter the GEO code for the property if applicable.

BNA

Enter census tract or BNA code if applicable.

MSA

Enter the Metropolitan Statistical Area (MSA) code in this field if applicable.

Capturing Valuation details

You can capture the following information in this screen:

Current

Check this box to indicate whether the valuation is current or not.

Valuation Dt

Specify the valuation date in this field.

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Source

Select the valuation source from the list maintained with the look-up. Press F9 to
view the list.

Supplement

Enter the valuation supplement in this field.

Edition

Enter the valuation edition in this field.

Currency

Select the currency from the list maintained with the look-up. Press F9 to view
the list.

Wholesale

Enter the wholesale value of the asset in this field.

Usage

Enter the usage of the asset in this field.

Retail

Enter the retail value of the asset in the field.

Usage Value

Enter the usage value in this field.

Add-ons/Attributes

Select the add-ons or attributes of the asset from the list maintained with the
look-up. Press F9 to view the list.

Add-ons

The system displays the value of the add-ons and attributes.

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Total Value

The system displays the total value of the asset in this field.

Capturing Vehicle details

You can capture the following details:

Primary

Check this box if the asset is the main or primary collateral.

Class

Select the asset class from the list maintained with the look-up. Press F9 to view
the list.

Year

Enter the year of the vehicle in this field.

Make

Select the make of the vehicle from the list maintained with the look-up. Press F9
to view the list.

Model

Select the model of the vehicle from the list maintained with the look-up. Press F9
to view the list.

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Body

Specify the body of the vehicle in this field.

ID#

Enter the identification number for the vehicle.

Registration

Specify the registration number of the vehicle.

Description

The system displays the description of the vehicle, in this field.

Address

Enter the building number in this field.

Address 1

Enter the first line of the address in this field.

Address 2

Enter the second line of the address in this field.

City

Enter the city in this field.

State

Select the state from the list maintained with the look-up. Press F9 to view the
list.

Zip

Select the zip code from the list maintained with the look-up. Press F9 to view the
list.

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Zip Extension

Enter the zip extension in this field.

Country

Select the country from list maintained with the look-up. Press F9 to view the list.

County

Select the county from the list maintained with the look-up. Press F9 to view the
list.

You can capture the same valuation details as of home loans, for vehicles too
in the third section of the screen.

Capturing Other details

You can capture the following information in this screen:

Primary

Check this box if the asset is the main or primary collateral.

Class

Select the asset class from the list maintained with the look-up. Press F9 to view
the list.

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Type

Select the asset type from the list maintained with the look-up. Press F9 to view
the list.

Sub Type

Select the asset sub-type from the list maintained with the look-up. Press F9 to
view the list.

Status

Select the asset status from the list maintained with the look-up. Press F9 to view
the list. The following options are available:

 Not defined
 Active
 In Inventory and
 Inactive

Year

Enter the year of the asset in this field.

Make

Enter the make of the asset in this field.

Model

Enter the model of the asset in this field.

Body

Enter the body of the asset if applicable.

Id #

Enter the asset identification number in this field.

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Registration #

Enter the asset registration number in this field.

Description

The system displays the asset description in this field.

Address

Enter the building number for the asset if applicable.

Address 1

Enter the first line of the address if applicable.

Address 2

Enter the second line of the address if applicable.

Zip

Select the zip code from the list maintained with the look-up. Press F9 to view the
list.

City

Enter the city from the list maintained with the look-up. Press F9 to view the list.

State

Select the state from the list maintained with the look-up. Press F9 to view the
list.

Zip Extension

Enter the zip extension in this field.

Country

Select the country from the list maintained with the look-up. Press F9 to view the
list.

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County

Select the county from the list maintained with the look-up. Press F9 to view the
list.

You can capture the same valuation details as of home loans, for other loans
too in the third section of the screen.

Checking for errors in the loan application

You can ensure that the loan application does not move from the application
entry stage to underwriting if certain conditions are not met. You can define
certain edits at a product category level for this purpose. These edits will be
handed down to the products in the respective categories.

Edits can be of two types:

 Warnings
 Errors

Warning

You can set up a warning to detect missing or in-appropriate non-critical

information in the stage. However you can over ride the warning.

Example

At the product category level, you have set up a warning stating that comments
relating to the land load should be captured. If the same are not captured, the sub-tab
will display a warning.

Errors

You can set up error messages to e displayed when the system detects missing or
inappropriate critical information. You will not be able to override the error
messages.

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Example

Suppose you have set a minimum age criterion for a specific loan category. If the
applicant’s age does not meet the specified criterion, this sub tab will display an
error.

To view the errors click on the tab in the second section of the Loan
Application Entry screen.

You can view the following details in this screen:

Date

The system will display the edit run date in this field.

Edit Type

The system will display the edit type in this field.

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You can view the unfinished or erroneous tasks in the Edit Details section.

Edit Name

The errors and warnings will be displayed in this field.

Result

‘Error’ or ‘Warning’ will be displayed in this column against each of the edit
names.

Complete the tasks for the items listed under ‘Edit Name.’

When you have finished correcting errors, click on the tab from the
first section of the screen to go to the next application.

Application related Status changes

Applications meeting various levels of lending criteria are classified under

various statuses and sub-statuses.

New-Blank

This is the status/sub status of applications during data entry. Applications

remain ‘New Blank’ until you click on the Next Application button on the
Application Entry screen. The system will then perform the application edits
check.

New-Prescreen

When an application is in this status, the system processes the pre-screen edits to
determine whether a credit report should be pulled for this application.

New-Prescreen Approved

The applications in this status/sub status have successfully passed the pre-screen
edits. The system will now request a credit bureau pull for them.

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218 FLEXCUBE Corporate

Rejected Prescreen Rejected

This status indicates that the applications in this status/sub status have failed the
pre-screen edits. These applications will receive no further processing. The
producer will be sent a decision fax and the consumer will receive an adverse
action letter.

New- Review Required

Applications in this status need to be reviewed by an underwriter. This could

either be based on the scoring of the application’s credit bureau pull or the fact
that a credit bureau report was not successfully obtained.

New- Recommend Approval

The system recommends applications in this status to be approved.

New- Recommend Rejection

The system recommends applications in this status to be rejected.

Approved-Auto Approved

Based on the scoring of the application’s credit bureau pull, the system
automatically approves the application. The producer is then sent a decision fax
and the application is passed to funding.

Rejected-Auto Rejected

Based on the scoring of the application’s credit bureau pull, the system
automatically rejects the application. The producer is sent a decision fax and the
consumer receives an adverse action letter.

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Loan Origination 219

Approved-Blank

In this status, the application has to be manually approved. Normally this occurs
when an application is in the ‘New- Recommend Approval’ status/sub status, or
less often in the ‘New- Recommend Rejection’ status/sub status. Any cycle code
definition with next values of ‘Approved-Blank’ should have an EDIT_TYPE_CD
look-up value of APP APPROVAL EDITS to ensure that all of the required data
has been gathered in making the decision of approving the application; (unless
the application is currently in a status/sub status that assures the APP
APPROVAL EDITS have been run).

New-Override Required

This status indicates that a user without sufficient override authority has
attempted to approve an application.

Retail Lending