The twelve moving parts
- Name the major systems in a lending and servicing estate
- State what each one is responsible for
LOC management — funding capacity, limits, utilization and availability. Loan/application register (LOR) — application and loan-level records from request through funding. Origination/application system — capture, credit decision, disclosures, e-signature. Funding system — moves money from the funding source. Disbursement system — schedules and executes disbursements to schools and borrowers, and handles returns. Loan boarding — creates the serviceable loan from origination data. Servicing platform — loan master, transaction engine, billing, correspondence, workflow. General ledger / accounting — the financial books of record. Payment processing — ACH, lockbox, card, agency remittances. Reconciliation — proves system totals agree with each other and with cash. Data warehouse / reporting — analytics, regulatory and management reporting. Audit trail — immutable evidence of who changed what, when and why.
A single $25,000 loan touches nine of these before the borrower ever receives a statement.
Most 'servicing bugs' are integration issues between two of these systems. Knowing the map lets you name the two systems in question instead of guessing.