Digital Transformation In Lending:
A Success Story With LF-LMS
About the Client
Our client, headquartered in New York, is a direct lender specializing in providing accessible capital to support the growth of small to medium-sized businesses. With over 600 active loans on their books, they offer financing options secured by property or vehicles, catering to businesses that struggle to secure funding from traditional lenders.
Background
Our client had been utilizing a loan servicing system from a different vendor, but they faced several challenges as the support for that system was nearing its end of life. The existing system was plagued by limited configurability, scalability, and outdated user interface issues. Manual work was required for ACH payment processing, validating standard letters, and generating complex portfolio-level reports. Faced with these limitations, the client made the decision to switch to a new loan servicing system within a tight timeline, requiring the implementation of unique features.
Key Requirements
- End-to-end loan lifecycle management, from amortization to pay-off/charge-off, with seamless automation.
- Integration of additional custom fields in the onboarding API to accommodate unique requirements.
- Support for different schedule types, including hybrid schedules.
- Capability to send custom installment amounts for interest-only loans.
- Ability to tag loans as performing/non-performing and track interest accordingly.
- Automatic adjustment of interest rates for delinquent loans, with the option for manual intervention.
- Bulk ACH creation at designated frequencies, storing funds in a suspense account for scheduled payments.
- Calculation of prepayment premiums based on rules and inclusion in relevant documents and pay-off payments.
- Agile technology partner capable of meeting evolving business needs.
- A highly self-service and automated system to minimize operational costs and ensure accurate payment and delinquency tracking.
- Custom report generation at both the loan and portfolio levels.
- Future capability to offer monthly frequency loans with a quick turnaround time.
- Capture and management of various collateral data at the loan level.
- Tracking of payments and withdrawals for multiple escrow accounts associated with loans.
- Migration of the existing loan portfolio to the new LF-LMS system.
- Protective advances to ensure the disbursement of additional funds in critical situations.
Proposed Solutions
LendFoundry, leveraging its domain expertise and end-to-end solution, proposed the implementation of LF-LMS (LendFoundry Loan Management System) to meet the client’s business needs. The proposed solution comprised the following components:
Some of the key benefits realized by the client include:
The LF-LMS implementation enabled our client to automate the loan servicing process, from post-funding to pay-off/charge-off/settlement. With an integrated solution, different teams within the organization could perform appropriate actions based on their respective roles, while the system administrator maintained control over user access levels. The client successfully migrated their active loan portfolio, empowering them to focus on scaling up their lending operations while relying on LendFoundry’s technology, data management, and 24/7 support as a trusted growth partner.
About LendFoundry
LendFoundry is the next-generation, cloud-based, SOC1 and SOC2 Type 2 compliant, full-stack technology platform to enable digital lending.
Available as a SaaS offering on AWS, LendFoundry is built using a microservices architecture and is highly customizable and scalable. Powered by API integration with 80+ traditional and alternative data providers and platforms, it can help digitize a lender’s entire loan lifecycle to deliver faster loans and also add new customer segments.
Key Modules: Borrower Portal, Broker Portal, Dealer Portal, Merchant Portal, Lender Portals, Loan Origination System, Loan Servicing System, Loan Management System, Business Analytics.
