Collateral liens
A lien is a claim or legal right against assets that are used as collateral to satisfy a debt. In a secured loan application, it is important to record any existing liens on collateral and to calculate the loan-to-value (LTV) ratio or the combined loan-to-value (CLTV) ratio by considering the proposed debt associated with an application.
With the Hydrogen release of Q2 Origination, the system is enhanced to:
Perform effective lien management on collateral by recording and managing existing liens on a product.
Record any other existing bank liens, and view if the collateral is linked to other applications.
Provide standard LTV/CLTV ratio calculations.
View the LTV ratio considering all the senior liens.
View the CLTV ratio considering all the existing liens.
Key concepts
A Collateral Type
It describes the type of collateral being pledged to a loan opportunity and drives the application processing requirements associated with the collateral.
A Collateral Category
It categorizes the assets or collaterals that you associate with a loan opportunity. It serves as a grouping mechanism for a large variety of potential Collateral Type values that you can configure in Q2 Origination and enables you to categorize them into smaller groups. The system administrator can define custom collateral categories, such as Business Assets or Real Estate. Collateral Types can be considered as sub-categories of collateral categories.
Once the collateral is added to an application, a lien is created on the collateral, and the details get added in the Collateral Liens section. If there are any existing liens on the collateral (irrespective of whether the loan/lease applications are in the same bank or different banks), those also get displayed in the Collateral Liens section. The loan amount linked to each of these liens is also recorded. In a scenario where the same collateral is linked to other applications, the references of the application (Application ID) and the application statuses are also displayed. Considering the existing liens, the values of the LTV ratio and the CLTV ratio vary.
To view a lien on the collateral:
Log in to your Salesforce account.
Go to
(App Launcher) > Applications.
On the Applications tab, and from the list of applications, select the required application.
On the application details page, go to Collateral.
The Collateral Details page is displayed.
Select the collateral for which you want to view the liens and then go to Collateral Liens.
You can edit or delete the lien record for an application.
Field Name Description Bank Name This is the Bank Code and/or the Name of the Bank related to the lien, which is a lookup to the Bank Name described earlier. Internal This field indicates whether the collateral is shared across multiple applications originating in the same bank. Nature of Lien
It is the nature of the lien that is recorded.
For example, the values could be Fixed Amount, Percentage, and more.
Lien Amount
The amount of the lien that the selected bank has on the collateral if the nature of the lien is a fixed amount. This option is enabled if the nature of the lien is a Fixed Amount and is updated in update mode.
Lien Position
It is the ranking of the lien of the bank in relation to that of the other banks. The ranking is based on Static Values, such as First, Second, Third, Fourth, and so on. It is enabled if the nature of the lien is a Fixed Amount. The Lien Position up to 10 is allowed. The position should not be skipped; that is, if a Lien Position of 5 is assigned, the earlier four liens must be captured.
Loan Amount This is the loan amount of the application for which the collateral is pledged. Status
The status of the lien that the other banks have on the collateral. The options include the following:
Proposed: This is the default value until the loan is closed.
Open: This is when the lien is in place.
Satisfied: This depicts that the loan linked to a lien has been paid off, and the lien no longer exists.
When a new lien is added, the status is set to Proposed, and the details are saved the first time. Later, the status needs to be updated as part of the origination and the servicing flow.
Pledged Date This is the date when the collateral is added to the application. Application ID It is the Application ID linked to the lien. Application Status It displays the status of the application linked to the lien. Note:If CL Loan and Q2 Origination both exist in the same org, the contract details are displayed on the same page. The loan contract ID is displayed on the application instead of the Application ID.